Coinbase becoming major ethereum-focused player: report

Coinbase stands out as a leading public company aligned with Ethereum as the blockchain’s ecosystem expands, according to a research report from Wall Street broker Bernstein.

The US-based cryptocurrency exchange operates Base, one of the largest Layer 2 chains on Ethereum, processing over 9 million daily transactions that use ether as gas fees.

Bernstein analysts estimate Base’s sequencer fees contribute about US$75 million in annualized revenue for Coinbase.

The report also notes that Coinbase holds about US$590 million in ether and has seen a 40% rise in July trading fees from the Q2 average, coinciding with a broader surge in ether trading.

🔗 Source: CoinDesk

🧠 Food for thought

1️⃣ Layer 2 solutions address scaling challenges Coinbase identified years ago

Coinbase’s Base network processing 9 million daily transactions represents a solution to problems the company’s own leadership foresaw years earlier.

In 2017, Coinbase co-founder Fred Ehrsam warned that Ethereum needed “a 100x improvement in scaling” to support decentralized applications with millions of users, noting that Facebook handled over 175,000 requests per second compared to Ethereum’s much lower capacity 1.

Base’s current transaction volume and $75 million annual revenue run rate demonstrate how Layer 2 networks have successfully addressed these fundamental scalability constraints.

This evolution shows how Coinbase transformed from identifying infrastructure problems to building solutions that directly capture value from resolving them.

The company’s strategic positioning allows it to benefit both from transaction fees on Base and from increased ETH trading activity on its main exchange, creating multiple revenue streams from the same underlying technology advancement.

2️⃣ Institutional crypto adoption validates Coinbase’s concentrated Ethereum bet

Coinbase’s $590 million ETH treasury holdings align with broader institutional investment trends that have accelerated significantly.

The launch of U.S. spot Ethereum ETFs in July 2024 attracted $33 billion in institutional assets, demonstrating substantial institutional demand for ETH exposure 2.

Coinbase’s decision to hold a substantial ETH treasury positions the company to benefit directly from this institutional adoption wave, rather than just facilitating trades for others.