Coinbase Expects $456 Million in Profits For 2018, Up From $380 Million in 2017

  • Coinbase's financial document revealed that it earned $380 million in profits during 2017.
  • The US-based cryptocurrency exchange expects to earn $456 million in profits this year (2018).

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San Francisco-based digital asset exchange, Coinbase, is reportedly expecting a revenue of around $1.3 billion for this year. This, according a document Bloomberg recently reviewed.

As CryptoGlobe reported, Coinbase may seek a valuation of about $8 billion - which would make it the “highest valued” startup in the US.

The US-based exchange also recently added Christopher V. Dodds, a veteran chief financial officer at Charles Schwab, to its board of directors.

Daily Trading Volumes Peaked In Late 2017, Early 2018

Notably, Coinbase’s recent valuation estimate is at least five times greater than it was last year (in 2017). Despite the extended crypto bear market, the digital currency trading platform still might have been able to generate a sizable revenue this year from the commissions it charges its users.

In December of 2017 and early 2018, daily crypto trading volume on Coinbase was in the billions of dollars, and peaked at around $3.5 billion in January of 2018. These numbers have now dropped considerably, however, it seems that the exchange’s reserves may have helped it remain afloat even though crypto prices have plummeted.

Coinbase is also known to have made substantial investments in various cryptocurrencies, however, there is no accurate estimate available on the current value of its assets.

$456 Million In Projected Profits

In 2016, when the digital currency market was a small fraction of its present size, Coinbase had reported a revenue of only $17 million, while also recording a loss of about $16 million. In 2017, Coinbase earned a massive profit of approximately $380 million - due to the dramatic increase in cryptocurrency prices last year.

This year, however, the leading crypto exchange is expecting to earn even more as it has projected a profit of about $456 million in 2018. Commenting on Coinbase’s business development, Asiff Hirji, the president and chief operating officer at Coinbase, said: 

The companies interested in investing in us know that this is the next wave of tech innovation. This was an opportunistic round. We didn’t have to go out and raise capital.

Asiff Hirji

Diversifying Business

Although the number of active users on Coinbase has dropped by about 80 percent since the time period between late 2017 and early 2018, the company has still managed to not only remain operational but has also made some key acquisitions.

In order to further expand its crypto trading services, Coinbase acquired Paradex, a decentralized digital asset exchange (DEX), in May of 2018. Due to the increasing number of hacks of large centralized exchanges, many crypto investors might feel more comfortable trading on a DEX - as traders do not have to share their private keys on these platforms.

While Coinbase expects to earn profits in this year’s bear market, Hirji emphasized that the exchange’s business depends heavily on cryptocurrency prices - meaning that if they decline further, then Coinbase’s sales would also drop.

$503 Million In Company Bank Account 

According to the document referenced by Bloomberg, Coinbase had about $503 million in cash in its company bank account. In order to remain competitive, the American firm has launched new products such as the Coinbase Bundle (in late September). As its name implies, Coinbase Bundle allows users to invest in multiple major cryptocurrencies with a single purchase order.

Last week, Coinbase Custody ("an institutional-grade service optimized for storing large amounts of cryptocurrency in a highly secure way") obtained a license to operate as an independent qualified custodian. As covered, Coinbase raised $300 million during its most recent fundraising round.

While discussing the kind of investors Coinbase is looking for during its latest fundraising round, Hijri said:

For this round, we simply weren’t interested in taking investments from firms that didn’t have a constructive view of crypto. This round, and the future of crypto in general, needs to be about more than asset prices.

Asiff Hirji

Token Listing Guidelines for Binance DEX

On Thursday (April 25), Binance unveiled guidelines for listing tokens on Binance DEX, its new decentralized exchange, and said that these guidelines would enable Binance DEX "to facilitate a larger number of crowd-vetted projects, hopefully listing 10x more tokens than currently listed on Binance.com."

Despite what some people think, issuing a token on Binance Chain does not mean that the new token will automatically get listed on Binance DEX. Binance, which has been criticized like most other centralized exchanges for having an opaque listing process, is hoping that the new "transparent and community-driven" listing process for Binance DEX will finally satisfy most if not all of its detractors.

The Binance DEX listing process consists of the following steps:

  • 1. Proposal
    • "It is recommended that Token Issuers first create a thread under the “Token Issuance & Listings” category in the Binance Chain Community Forum."
    • "It is recommended that this public thread contain full answers to the Binance DEX Token Listing Submission Criteria..."
    • "Token Issuers must initiate an on-chain Proposal Request (fee of 10 BNB) to list a trading pair for a token."
    • "Token Issuers must request BNB as the quote asset for their first trading pair. For example, ABC/BNB."
    • "Once the proposal request is submitted, Token Issuers must post the Proposal ID to their proposal thread in the forum as a ‘reply’."
  • 2. Deposit
    • "Once the proposal request is sent, Token Issuers will need to deposit at least 1,000 BNB within 2 days."
    • "Proposals that do not receive sufficient deposits within this timeframe will not be able to move on to the voting stage and their deposit will not be refunded."
    • "If the Vote passes in Step 3 (majority 'Yes'), the 1,000 BNB deposit will be refunded."
  • 3. Vote
    • "At least half of the voting power is required to vote 'Yes' for the proposal to be accepted."
    • "Binance Chain Validators can vote for either 'Yes', 'No', 'NoWithVeto', or 'Abstain' within the time period specified in the proposal request."
    • "The 1,000 BNB deposit will be refunded if the majority of Validators vote for 'Abstain'."
    • "Proposals are denied if one third of the Validators vote 'NoWithVeto' or if half of the Validators vote 'No'."
    • "Denied proposals will lose all the funds deposited, however this result will only occur in rare circumstances when there is relatively clear fraud, scam or spam."
  • 4. List
    • "If the vote is passed, the Token Issuer will need to initiate a 'List' transaction on-chain (2,000 BNB fee) within the timeframe specified in the proposal, while the previous 1,000 BNB deposit will be refunded back to the proposing user."
    • "The trading pairs will be live immediately after this request is completed."

Binance DEX Listing Process Workflow Screenshot.png

Binance says that the "listing application, project information, vote results and all community interaction will be public on the Binance Chain Community Forum," that the decisions of the Binance Chain Validators (who are the only ones with the power to vote) are "purely based on public information in the forum," and that there is no other way "for projects to contact Binance Chain Validators."

One interesting thing to point out is that although the Binance DEX listing fee has been set to 2,000 BNB (currently, according to CryptoCompare, worth around $45,580), originally Binance CEO Changpeng Zhao (aka "CZ") was thinking of making the listing fee on Binance DEX be around $100,000, as he mentioned in his first Ask Me Anything (AMA) session on February 7:

"There will be a listing fee on the DEX. I actually deliberately want to set that a little bit high, just so we reduce the number of spam or scam projects. And there’s also a voting process by the validators to be listed on the DEX. So there’s a fee, I think the fee will be probably close to $100K US, so we’ll see. But the fee is adjustable over time, it’s quite easy to change."

Earlier today, Mithril, the first crypto project to migrate its token (MITH) to Binance Chain, got listed on Binance DEX:

 

All Images Courtesy of Binance