Coinbase turns to staking amid the current market downturn
Leading cryptocurrency exchange platform Coinbase has decided to focus on its staking business model rather than on the current underwhelming market performance.
Staking lets investors earn rewards with their crypto tokens by participating in the network of that particular asset. Staking participants make an asset's underlying blockchain more secure and efficient. In return, they are rewarded with more tokens from the network.
Coinbase has been offering staking rewards for a while now and plans to double down on the product as part of its business model in anticipation of the Ethereum merge. The merge is a process that would fully transition the Ethereum network from a proof-of-work model to the faster and more scalable proof-of-stake model.
In the last earnings call, Coinbase CEO Brian Armstrong clarified the point and discussed how the company is not disturbed by the company losses. Coinbase suffered a massive quarterly loss, with trading revenue dropping by over 60% in the year’s recently concluded quarter.
'Any given quarter, it could be up or down,' he said of the cryptocurrency market. 'It's important to distinguish between what is in our control and what's out of our control.'
In its shareholder letter, Coinbase also revealed that its staking product had helped it to retain much of its user base. 'As a result of our core retail customer trading less, our [monthly transacting user] mix has trended more towards non-investing activities—notably staking,' it said.
The platform also said its staking service is an "early win" for the company and mentioned its global vision of becoming the foremost cryptocurrency staking service provider.
Currently, Coinbase offers staking rewards for tokens like Algorand, Cardano, Cosmos, Solana, and Tezos. It added Ethereum to the list earlier this month.
Highlighting the popularity of its staking product, Coinbase revealed, 'Across all assets we support, [Coinbase] saw higher native units staked in Q2 compared to Q1.'
The company also said it has plans to enable staking for more cryptocurrency tokens soon.