Coinbase has a long way to go before it becomes the number one staking provider. When reporting its quarterly earnings in August, the firm revealed to shareholders its plans to prioritize the development of its staking products, which align with its long-term goal of becoming the top provider.
When Coinbase user stakes their crypto, they get loaned out to validators on various blockchain networks. Validators utilize the money to secure the network and process transactions, and in turn, users receive a part of the validators’ rewards.
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On Thursday, Coinbase reported its Q3 earnings revealing mixed results for its blockchain rewards category. The company posted about $62 million in revenue for the quarter from $78 million in the same period last year, representing an 18% drop.
It’s important to note that only a few crypto assets compare favorably to this time back in 2021 when the overall crypto market had surpassed a $2.9 trillion market cap as Coinbase’s share price(COIN) was at $335. Today, the crypto market has lost nearly two-thirds of its value, and COIN is trading at $58, representing an 82% drop.
Coinbase Records 77% Increase in Earnings Compared to Last Year
Comparing the first three quarters of 2022 to the same period in 2021 illustrates a different story. In the first nine months of last year, Coinbase earned nearly $122 million in revenue from blockchain rewards and $213 million over the same period in 2022, increasing its revenue by 77%.
Coinbase attributes the increased revenue to the growing participation in staking in terms of the number of users and the increasing number of native units staked across all crypto assets supported on its platform.
The company says Solana primarily boosted the staking user growth when it added its support in June. Also, Coinbase added support for Cardano staking in March.
Coinbase Suffers Slow Adoption in Ethereum Staking
Despite the crypto exchange gaining traction with some of its staking products, there is slow growth in Ethereum. Coinbase launched institutional staking for Ethereum in Q3, and it is optimistic about the long-term opportunity despite the slow adoption of Ethereum staking.
According to blockchain analytics firm Nansen, before the Ethereum merge, Coinbase accounted for about 16% of the 13.6 million staked ETH. In October, Coinbase represented 14% of the staked ETH despite the ETH number increasing to 14 million. That means people have opted to stake ETH with Coinbase rivals.