Institutional trading volume rose 50% in Q2, with Ethereum outpacing bitcoin for the first time

Coinbase shareholder Letter: Ethereum Outpaces Bitcoin for first time as Q2 Institutional Volume Grows 50%

Original article: Qin Xiaofeng

原文编辑：郝方舟，Odaily星球日报

Early this morning Beijing time, the largest encryption platform in the United StatesCoinbase(NASDAQ: & have spent COIN) releaseSecond quarter Stock Eastcom (click to view).

Coinbase's total revenue for the second quarter was around $2.23 billion, beating market expectations of $1.747 billion and up 80.9% from the previous quarter ($1.802 billion). Net income was $2.033 billion, while other income totaled $194 million; Second quarter net profit of $1.61 billion, better than market expectations of $566 million, compared with the first quarter ($771 million) up 108%; Adjusted EBITDA of $1.15 billion was better than market expectations of $961.5 million; The number of monthly active users in the second quarter was 8.8 million, up 44% from the previous quarter, bringing the total number of users to 68 million.

Coinbase shares (COIN) were up more than 3.5% in late trading after the data was released. Over the past week, the price of COIN has continued to rise, from $230 to $282 at one point, up more than 20%; As of press time, COIN was trading at $270, 8% above its IPO price of $250, but 41% below its first day opening price of $381.

Below, Odaily Planet provides an excerpt and interpretation of Coinbase's shareholder letter highlights:

1. Faster admission of institutions and more attention to Ethereum

The chart below shows that Coinbase's total trading volume in q2 was $462 billion, up 37% from $335 billion in Q1.

(Trading Volume Structure)

Retail users (retail) accounted for only 31 per cent of the $145bn of transactions; Institutional users contributed the lion's share of transactions, at $317bn. In terms of growth, retail trading volume grew only 20.8% compared to the previous quarter, while institutional trading volume rose 47%, which is encouraging news for the market.

To be clear, the second quarter includesMicroStrategy is among a number of U.S. stock listed companies that have added bitcoin positions. Meanwhile, Coinbase has forged partnerships with industry leaders including Musk, PNC Bank, SpaceX, Tesla, Third Point, and WisdomTree. That may have had a positive impact on Coinbase's increased institutional trading volume.

However, in terms of the specific income structure, retail trading still contributes more. In the second quarter, retail trading revenue was $1.828 billion and institutional trading revenue was $102 million, the data showed. The bottom line is that Coinbase offers preferential rates to institutional userspolicy, far lower than retail.

(Revenue Chart)

Total transaction revenue for the second quarter was $1.93 billion, up 25.3% from the first quarter ($1.54 billion) and 1,035% from the same period last year ($170 million).

In terms of currency transaction structure, Ethereum leads the way. The data showed that Ethereum accounted for 26% of Coinbase's trading volume in the second quarter, while bitcoin accounted for 24%. It was the first time that ethereum's share of trading volume surpassed bitcoin's.

Coinbase offers three explanations for this phenomenon:

• The second quarter (after May) cooled, with bitcoin trading volumes slightly down in the second quarter;

  
  

• Due to theDeFiandNFTThe growth of the ecosystem, and our ETh3.0 Staking products drive increased demand, and significant growth in ethereum volume;

  
  

• Additional assets have been added to the Coinbase platform and trading volumes have increased significantly.

  
  

While bitcoin's share of trading volume has declined, it remains the bulk of Coinbase's asset stockpile. The data showed that the total assets on the platform were $180 billion as of June 30, and the crypto assets on the platform accounted for 11.2% of the total crypto asset market capitalization -- of which 47% wereBTCAnd ETH accounted for 24%.

Despite the decline in platform assets, Coinbase's mtus continued to grow in the second quarter, from 6.1 million in the first quarter to 8.8 million in the second quarter. "The growth of MTU in the second quarter is due to encryptioncurrencyDriven by market conditions, product launches, our marketing efforts, and the increase in the number of cryptocurrency assets we support."

2. Income diversification

For the vast majority of crypto trading platforms, trading revenue is an important source of revenue. But the single way of income also makes its ability to resist risk weakened, especially the market bear, the decline of market activity, trading income will directly shrink substantially. Coinbase is aware of this and is expanding its revenue channels and sources.

(Subscription and service revenue)

"Subscription and service revenue" totaled $564 million last quarter and $102.6 million in the second quarter, up 82% from the previous quarter. And non-trading revenue rose to 5.1% of revenue from 3.6% in the previous quarter, still a small but improving share.

Coinbase is still a transaction-driven company, but in terms of revenue, non-tradable items are becoming important, and these steps will help Coinbase expand its current revenue base.

(Odaily Planet Note: Subscription and service revenue includes capital escrow fees, blockchain revenue, interest rate incentives, etc.)

There is one more detail to note. Coinbase reported net profit of $1.61 billion in the second quarter, up 108% from the first quarter ($771 million), but revenue didn't double. Coinbase explained that the underlying reason for the profit increase was the tax break. "In the second quarter, we recognized a tax benefit of $737 million, primarily due to a tax deduction for share-based compensation for full-time employees following our direct listing in April."

3. How will Coinbase perform in the third quarter?

Throughout July, the crypto market did not significantly improve, and bitcoin fluctuated around $35,000. However, after ethereum's London upgrade on the night of August 5, the market seemed to pick up and bitcoin kept rising, reaching a high of $46,000.

So what does Coinbase expect for the third quarter? The official introduction:

"In July, retail Mtus and total trading volumes were $6.3 million and $57 billion, respectively, as cryptocurrency asset prices and volatility declined significantly relative to q2 levels. August to date, retail Mtus and trading volumes have improved slightly compared to July levels, but remain below levels seen at the beginning of the year. As a result, We think retail MTU and total volume will be lower in q3 than q2."

It was the pessimistic outlook for the short-term market that caused COIN's share price not to rise sharply after the data disclosure, and even fell more than 3% at one point after hours.

Coinbase remains optimistic about the long-term growth of the crypto market. "The latest University of Chicago survey shows that 13 percent of Americans have traded cryptocurrency assets in the last year, compared to 24 percent who traded stocks. These adoption trends, combined with the recent government focus on cryptocurrencies as a source of tax revenue, indicate that we have reached an inflection point and cryptocurrencies have arrived."

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