Coinbase (COIN)

Basics

• Based in San Francisco
• From Forbes Blockchain 50 (19-2-2020):

"Eight years after its start, Coinbase has opened 35 million accounts, presides over $21 billion of assets and is on target, we estimate, to top $800 million in revenue this year. Think of Coinbase as the blue chip among dozens of cryptocurrency exchanges, abiding by regulations and serving institutional investors, pension funds, endowments and retail investors alike. In February 2020, Coinbase announced that it had received authority from Visa to issue its own credit cards."

• "Backed by trusted investors and used by millions of customers globally, Coinbase is one of the most popular and well-known brokers and trading platforms in the world. The Coinbase platform makes it easy to securely buy, use, store and trade digital currency. Users can purchase bitcoins, Ether and Litecoin and since 2018 many other coins from Coinbase through a digital wallet available on Android & iPhone or through trading with other users on the company’s Global Digital Asset Exchange (which rebranded to Coinbase Pro) subsidiary. Coinbase Pr currently operates in the US, Europe, UK, Canada, Australia and Singapore. Coinbase Pr does not currently charge any transfer fees for moving funds between your Coinbase account and Coinbase Prhttps://www.theblockcrypto.com/post/80824/coinbases-chief-compliance-officer-is-set-to-leave-the-firm account. For now, the selection of tradable currencies will, however, depend on the country you live in."

Audits & Exploits

• From Blockthreat (18-2-2022):

"Coinbase patched a market manipulation vulnerability after it was responsibly disclosed by Tree of Alpha."

• From Bitcoin.com (3-10-2021):

"Coinbase has disclosed that at least 6,000 users were victims of a hacking campaign to gain unauthorized access to the accounts of Coinbase customers. The hackers also took advantage of a flaw in Coinbase’s SMS Account Recovery process to gain access to user accounts."

Tokens

• Together with Circle and CENTRE it has a stablecoin called USD Coin
• They also had their own IPO with the stock COIN in Q1 of 2021.

Projects

Coinbase Lend

• Coinbase has dropped its plan (21-9-2021) to launch a lending program after the U.S. Securities and Exchange Commission (SEC) threatened to sue the company.
• From Bitcoin.com (30-6-2021):

"Coinbase announced pre-enrollment for its usd coin (USDC) savings program that allows clients to earn a 4% APY interest rate on USDC held on the platform."

Oracle

Basics

• From Crypto Briefing (23-4-2020):

"Coinbase has announced an oracle that will provide verified price data for two trading pairs: BTC-USD and ETH-USD. The move also roused conversation around Chainlink’s market position."

Tech

• From Crypto Briefing (23-4-2020):

"Coinbase will sign all oracle data with its private key. Anyone can use this data on-chain verify that data by checking it against Coinbase’s public key. The oracle will send new data from the Coinbase Pro exchange every minute, ensuring that price data is always up-to-date."

• From this Tezos forum (30-4-2020):

"The Coinbase Oracle is a verifiable price feed for the BTC/USD and ETH/USD markets that anyone can publish on-chain. The price feed is accessible through a centralized API, and is updated every minute with data sourced from Coinbase Pro.

All posted prices are signed using the Oracle’s public key. This allows anyone to post price data on-chain, without trusting the poster of the data. The Oracle implements a filtering mechanism that automatically rejects price points that significantly deviate from the reported asset’s expected volatility. The result is a trusted, but reliable feed that any DeFi protocol can integrate easily."

Usage

• From Crypto Briefing (23-4-2020):

"Anyone can use the exchange’s oracles immediately, and a few projects have already expressed support for the project. Compound, a crypto interest platform, says that it will use Coinbase’s oracle to “increase the security and decentralization of [its] price feed.” Furthermore, Coinbase’s oracle data will be compatible with Compound’s “Open Oracle” series of Ethereum smart contracts. Derivatives platform dYdX has also endorsed the product."

Bugs/Hacks

• Its Open Oracle System caused a $100M liquidation on Compound when the peg with DAI was lost on Coinbase (26-11-2020):

"Whether this was a manipulation or a technical issue isn’t yet clear, but we do know that no flash loans were used. To manipulate the Coinbase order book to such a state would have cost 100k DAI, as the order book had 300k of depth, and the off peg price reached $1.3.

Was this malicious, careless, or expired tech? Either way, those liquidation bots profited from this incident. Using any singular centralised data source as a price oracle is unwise, and Coinbase is particularly bad, especially if you can wipe the order book with 100k."

Skew

• Skew is a data analytics platform that got acquired by Coinbase and will be integrated with Coinbase Prime (1-5-2021).

Staking Service

• "Coinbase's recent staking-as-a-service announcement is an answer to Proof-of-Stake (PoS) token holders desire for inflation offsetting rewards, particularly for those who who cannot stake on their own; stakers can anticipate rewards of 5-8% per year which is not interest, but an inflation reward with governance rights attached. Governance rights mostly amount to network votes, like the recent Tezos' Athens protocol vote."

Compliance

• Has a BitLicence since 2017.
• From Decrypt (16-10-2020):

"Coinbase disclosed the agencies who requested information about its customers. The Federal Bureau of Investigations topped the list. The San Francisco-based exchange disclosed that between January 1 and June 30 of this year, law enforcement requested information 1,914 times; 96.6% of these requests concerned criminal investigations. For context, that's more than double the amount of law enforcement requests received last year by competing US-based exchange Kraken."

• Registered with the SEC (12-2020):

"Coinbase Global, Inc. announced that it has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”). The Form S-1 is expected to become effective after the SEC completes its review process, subject to market and other conditions."

Usage

• From Crypto Briefing (31-8-2020):

"Uniswap’s Daily Volume Just Overtook Coinbase by More than $80 Million. Uniswap’s 24-hour trading volume of $479 million outpaced Coinbase’s $397 million. This is the first instance of a decentralized exchange (DEX) facilitating more volume than crypto incumbent Coinbase."

• From Decrypt (14-10-2020):

"Coinbase holds approximately 994,904 Bitcoin in cold storage, according to ChainInfo, a Bitcoin analytics platform. By today’s prices, this amounts to over $11 billion. In December 2019, it was reported that Coinbase was holding 966,230 Bitcoin."

• From The Defiant (8-4-2021):

1. "56M verified users, up 30% from 43M verified users at the end of Q4
2. $223B in total crypto assets, up 148% from $90B from Q4 and representing over 11% of the entire crypto market share
3. $1.8B in total revenue, up over 200% from $585M last quarter, and surpassing its entire 2020 annual revenue of $1.3B.
4. Other relevant Q1 metrics include: $335B in trading volume and net income somewhere between $730 to $800M."

Pro's & Cons

• Pros: Good reputation, security, reasonable fees, beginner friendly, stored currency is covered by Coinbase insurance.
• Cons: Customer support, limited payment methods, limited countries supported, non-uniform rollout of services worldwide, Coinbase Pr suitable for technical traders only.

Team

• Armstrong, Brian; founder
• Srinivasan, Balaji; former CTO
• Ehrsam, Fred; founder, stepped back end January 2017. Now a board member
• Romero, Dan; vice-president and GM
• Brian Brooks; Chief Legal Officer; Brooks comes from mortgage giant Fannie Mae, where he served as General Counsel and Executive Vice-President.
• Jeff Horowitz; ex-Chief Compliance Officer; formerly global head of compliance at Pershing. (Left after the no-politics rule came into place 12-10-2020)
• Surojit Chatterjee; Chief Product Officer, formerly 11 years at Google, as VP. Chatterjee is Coinbase’s first chief product officer since the departure of Jeremy Henrickson in December 2018, the company confirmed.
• Tim Wagner; VP of enginering; a veteran of Amazon Web Services, to be its vice president of engineering
• Michael Li; VP of data; Li spent the last seven years at LinkedIn, most recently as its head of analytics and data science.
• Chris Dodds, Board of Directors; who also who serves on the board of directors of The Charles Schwab Corporation. Chris brings world-class leadership skills, deep knowledge of the financial services industry, and significant financial and accounting experience. His extensive expertise will be an asset to the Coinbase leadership team as we focus on scaling our business. Chris started a 21-year journey with Schwab in 1986, holding a variety of financial positions in treasury, corporate development, and financial planning and analysis throughout his tenure at the company. He served as Vice President of Corporate Finance and Mergers and Acquisitions from 1989 to 1993, and Treasurer from 1993 to 1997. Chris was also the company’s Corporate Controller, followed by eight years as Chief Financial Officer from 1999 until 2007. He transitioned to serving as a Director of Schwab Bank in 2007, and joined the Board of The Charles Schwab Corporation in 2014, where he serves as Chairman of the Risk Committee. In 2008, Chris became a senior advisor in the Financial Services practice at The Carlyle Group, a private equity firm. After 10 years there, he transitioned to The Cynosure Group, another private equity firm, where he currently serves as a senior advisor.

• Marcus, David; Board of Directors, Vice President of Messaging Products at Facebook. Prior to Messenger, David was President of PayPal, where he led the payments company’s global expansion and product strategy. Under his leadership, PayPal brought back its technology and product centric DNA, won back developers and small businesses, and acquired Braintree (parent company of the popular P2P payment app, Venmo) that further accelerated the overall growth of the company. David joined PayPal after the acquisition of his last startup, mobile payments company, Zong, and led Mobile products before ultimately taking the leadership role at the company.
• Coinbase has added (31-8-2020) Marc Andreessen of venture capital firm Andreessen Horowitz and Gokul Rajaram, a DoorDash executive, to its board of directors. The pair replace outgoing board members Chris Dixon and Barry Schuler.
• Mark Nesbitt, engineer
• Luke Youngblood, works for Coinbase Custody, previously a solutions architect at Amazon Web Services (AWS), has joined Coinbase (3-2019) to build products for staking and governance projects, a sector of the industry enjoying an increasing amount of social and investor attention
• Ron Bernstein; Product Lead of Paradex at Coinbase
• Josh Ellithorpe; Senior Software engineer (BCH fan)
• The wife of 0x founder Will Warren worked for Coinbase
• Alex Kroeger; Previously data science for Coinbase Pro
• Coinbase has hired executives from Barclays, Google, Lyft
• Reuben Bramanathan; "an early employee at Coinbase, where he worked as both a lawyer and a product manager."
• Amiti Uttarwar; former (8-12-2020) employee who handled big money transfers.
• Antonio Juliano; former engineer, now founder & CEO of dYdX.
• Brett Redfearn; vice president of its capital markets division. Former SEC Director (31-3-2021)

Investors & investments

Investors in Coinbase

• Adam Draper; early investor in Coinbase after being pitched about a Bitcoin wallet by Brian Armstrong himself.
• Andreessen Horowitz; investor (25mil)
• Ankur Nandwani; now advisor of BAT
• Silbert, Barry; through Digital Currency Group (around 500k)
• Bitfury Group, investor
• Blockchain Capital, investor
• Has investment from Union Square Ventures
• Is part of the portfolio (9-3-2020) of 1confirmation.

Investments and funding done by Coinbase

• Coinbase’s cash reserves stood at $4.36 billion at the end of June 2021, up from $1.1 billion at the end of last year.

• Has been known to invest big in stablecoins
• AZTEC. Backing (11-2-2020) AZTEC.
• The Block. Invested $25,000 in The Block, which was returned after conflict accusation.
• Was a sponsor of Coin Center but not on the website anymore as of 6-2019
• CoinMetrics. From CoinDesk (26-3-2020): Participated in $6M Series A Funding Round.
• IDEO CoLab Ventures. 'Executives from Coinbase' are backing IDEO Labs Ventures (27-10-2020).
• InstaDapp. Was part of a $2.4M seed round (1-10-2019) in InstaDapp. (In which Balaji Srinivasan, the former CTO of Coinbase, also participated)
• Messari; Coinbase Ventures took part in the $21M funding round (5-8-2021). They had already invested in prior rounds as well.
• NEAR. Is backing NEAR
• OpenZeppelin. Has invested in OpenZeppelin.
• PompCryptoJobs; on of the three backers (27-1-2021).
• Tagomi. Has acquired (27-5-2020) Tagomi.
• Zabo; got bought by Coinbase (5-8-2021).

• In Q3 of 2018 alone they already invested in nine more companies, including: Horizon Games, Coinmine and Public Market.
• And acquired the Distributed Systems team, who joined Identity group and officially closed the Keystone acquisition
• "Coinbase is putting money to work as part of a bid to grow the decentralized finance (DeFi) ecosystem. Announced Tuesday, the US cryptocurrency exchange is investing 1 million USDC each in lending protocols Compound and dYdX. Called the “USDC Bootstrap Fund,” Coinbase says the new fund will support developers by “investing USDC directly in the protocol.”"
• From CoinSpice (2-4-2020):

"Coinbase, one of the most important US-based exchanges, announced the injection of $1.1 million worth of USDC to DeFi projects through their USDC Bootstrap fund, a smart contract investment initiative. Coinbase decided to invest in two popular DeFi Apps: PoolTogether and Uniswap. Uniswap will receive 1 million USDC to fund their USDC/Ethereum pair, providing more liquidity to trading, while PoolTogether will also add 100,000 USDC to the reward pool for those using the DeFi app."

• Bitcoin. From CoinDesk (23-12-2020):

"Coinbase has revealed the inaugural recipients of its Crypto Community Fund developer grants. First announced in October, the fund was established to support Bitcoin developers in their work on projects that support the cryptocurrency’s underlying technology.

The first two developers, João Barbosa and pseudonymous developer 0xB10C, were chosen by the fund’s advisory board, which includes Stanford cryptography professor Dan Boneh and Bitcoin developers Carla Kirk-Cohen, Anthony Towns, Amiti Uttarwar and Felix Weis."

• Worldcoin; one of the many VCs who participated in this controversial project (24-10-2021).

Partnerships and other

• Is a consortium member of Facebook's Libra and therefor a possible node of the coin's network.
• Is also a member of the Celo Alliance, which is a Libra's competitor.
• Also created the Token project and GDAX
• Attender of Satoshi Roundtable
• Used to be a Barclays partner (not anymore 2019)

• And in the same quarter also onboarded 25 clients to Coinbase Custody, including Multicoin Capital, MetaStable, and Blockchain Capital.
• As of 7-2019 on the partner & clients list of ZeppelinOS.
• Grayscale Investments has chosen Coinbase Custody to serve as the new security provider for its digital asset holdings, the two companies announced 3-8-2019; Coinbase Custody, which Coinbase CEO Brian Armstrong says already holds around $1B in digital assets, will act as the custodian for Grayscale's investment products. Grayscale claims to hold $2.7 billion in total assets under management, according to its most recent quarterly report, more than doubling its Q1 holdings of $1.2B.
• Coinbase Custody is partners with Securitize.
• Founding member of the Crypto Rating Council (9-2019).
• It's founder is part of HOLDpac's first donors (23-3-2020).
• Partner of Swipe, according to it's website (10-4-2020)
• Struck a deal (12-7-2020) with the U.S. Secret Service to license its Coinbase Analytics tools.
• Coinbase is outsourcing staking to Bison Trails. Has bought Bison Trails (20-1-2021).
• Used to sit on the board of the Blockchain Association, but "left the association and the board in protest of Binance U.S. being awarded membership in the organization."
• Coinbase announced in a tweet Thursday it had joined the DeFi Alliance (9-4-2021).
• From Decrypt (19-9-2021):

"The Immigration and Customs Enforcement branch of the U.S. Homeland Security has given a $1.36 million contract to crypto exchange giant Coinbase for “business application” and “application development software”, according to the Federal Procurement Data System. Coinbase will provide the Immigrations and Customs Enforcement branch with blockchain analytics software. The crypto exchange has also provided software to the U.S. Secret Service and Inland Revenue."

Coinbase Ventures

• Venture arm of Coinbase.

Investments

• From a blog by the COO (16-8-2021):

"Coinbase Ventures has more than 150 investments in our portfolio. These investments include bets across all sorts of compelling areas in crypto, from international plays (Bitso, a Latin American exchange) to crypto tax players (CoinTracker and TaxBit) to marketplaces (Dapper Labs and OpenSea) to infrastructure plays (Spacemesh and Starkware) to decentralized finance, or DeFi (Uniswap and Compound)."

• Acala; non-disclosed investment (1-4-2021).
• Aptos; took part in their $200m strategic round (15-3-2022).
• Authereum. Participated (12-2-2020) in a 1.1M seed round for Authereum.
• Bitclout; it's founder has mentioned this fund as an investor (23-3-2021).
• Celo; according to Messari (24-6-2021).
• Coda. Invested in Coda.
• Compound. Was part of an $8.2M seed round for Compound in May of 2018.
• Consensys; was part of the $200M raise Consensys held (11-2021).
• Covalent; was part of a $2M round (26-3-2021).
• DerivaDEX. Is one of the backers in a $2.7M raise for DerivaDEX (2-7-2020).
• Dharma. Backing Dharma (30-7-2020).
• DODO. Participated in a $5M raise for DODO (15-10-2020).
• Dune Analytics; Dune mentions them as one of their backers (22-3-2021).
• Fei Protocol; part of a $19M raise (9-3-2021).
• Gauntlet. Is an investor in Gauntlet, according to their website (19-10-2020).
• The Graph. Participated (7-2020) a $5M token sale for The Graph, together with MultiCoin, DTC Capital, and others.
• Goldfinch Protocol. Participated in a $1M funding round among a list of other funds (3-2-2021).
• LayerZero; part of the Series A of $135 million (31-3-2022).
• Livepeer; participated in their $20M Series B (7-2021).
• Matter Labs; participated in an undisclosed round for zkSync (1-3-2021).
• Matic. Gave seed money to Matic
• Messari. Participated (11-2019) in a funding round of 4 million for Messari.
• Moonbeam; part of a $6M raise for PureStake (30-3-2021).
• Nansen; participated in a $12M raise (6-7-2021).
• Notional, participated in a $1.3 funding round (2-11-2020).
• Paxos; part of their $300M D Series (29-7-2021).
• Rarible; participated in a $1.75M rase (3-2-2021).
• Rift Protocol; Coinbase Ventures is mentioned as a backer on the Rift website (21-3-2022).
• Saddle; is mentioned as an investor on Saddle's website (17-6-2021).
• Saffron Finance; is mentioned as a strategic partner (8-3-2021).
• Set; part of their $14M raise (29-5-2021).
• Syndicate; part of a $20M raise (31-8-2021).
• Synthetix; was one of the three VCs which bought SNX from the DAO ($12M in total) and has also joined their Spartan Board (12-2-2021).
• Terra; was part of a $25M raise (27-1-2021)
• UMA. Invested in UMA.
• Vega Protocol; part of the $2.2M raise (18-3-2021).
• Zapper; participated in an extension of their Seed Round (16-10-2020).
• Zora. Participated in a $2M raise for Zora (16-10-2020).

Coinbase Custody

• Member of POSA (10-7-2020).