Since cryptocurrency prices have slumped during the recent months and the crypto winter has also diminished individual and institutional investors’ enthusiasm for trading digital assets, Coinbase admits that its growth is driven mostly by its staking services.
Compared to the same quarter a year earlier, Coinbase’s trade volume decreased by more than 50% from $462 billion to $217 billion, according to their Second Quarter Shareholder Letter.
Coinbase and its superior staking services
According to the same letter, Coinbase said that to keep its users around the company will offer them the ability to stake crypto.
“As a result of our core retail customer trading less, our [monthly transacting user] mix has trended more towards non-investing activities —notably staking,” the letter stated.
Staking is the practice of lending out one’s cryptocurrency in order to confirm transactions on a network’s protocol. This allows investors to earn interest in their cryptocurrency holdings. Validators on proof-of-stake (PoS) networks are allowed to operate, which ensures the network’s safety and allows transactions to be processed.
‘Early win’
Coinbase views its staking offering as an “early win” for the business. In addition, it states that staking is one of Coinbase’s top-priority products, with the long-term objective of being the leading staking provider among crypto-related organizations.
“Blockchain rewards benefited from increased participation in staking – both in terms of number of users and increase in the number of native units staked across all assets supported on our platform,” the Letter stated.
Growing addition for staking
“Our recent addition of both Cardano and Solana for staking helped drive growth,” it added.
Coinbase provides staking incentives for Ethereum, Algorand, Cosmos, and Tezos coins. It added Cardano and Solana to this list in March and June, respectively. During the second fiscal quarter of this year, 67% of Coinbase’s monthly transactional customers interacted with the company’s non-investing offerings, including staking.
Ethereum makes its long-awaited switch from a proof-of-work validation mechanism for transactions to a proof-of-stake one, Coinbase keeps staking as its business model’s key component in the countdown to Ethereum merger.