Coinbase (COIN)

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Revision as of 01:01, 22 April 2024 by Grand Master Pepe (talk | contribs)

Basics

  • Based in San Francisco
  • A testnet for Base had been live since the start of February 2023. A dev mainnet got released in June and their official mainnet launch is scheduled for 9-8-2023.
  • 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

  • Had a Code4rena contest with 100 submissions and claimed no serious finding were made on the Base L2.

Bugs/Exploits

  • "We had a delay in block production due in part to our internal infrastructure requiring a refresh," Base reported (6-9-2023) on Twitter.
  • From Blockthreat (18-2-2022):

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

"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."

Base Governance

  1. "Sequencer is centralized at the moment
  2. Users cannot propose L2 blocks at the moment
  3. No fault proofs at the moment
  4. Contracts are upgradable"

“Coinbase is going to gradually transition into a role where we’re a contributor to Base, we provide services and products that are built on top of Base, and we are not the decision maker for everything in the Base network—that’s being done through more decentralized governance,” Pollak said. Pollak heads up the small Coinbase team dedicated to working on Base."

Admin Keys

DAO

Notable Governance Votes

Treasury

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.
  • There is no plan for a BASE token (2-2023). Coinbase doesn't need a token to incentivize usage of its chain as it already has a colossal user base. ETH will be the native gas token of the chain, with plans for account abstraction enabling users to pay fees with whatever coin they want.

Technology of Base, their L2

  • Whitepaper or docs can be found [insert here].
  • Code can be viewed here. Got open sourced on 20-10-2023.
  • Consensus mechanism: based on Optimism. Base is a fork of the OP codebase. The Coinbase and Optimism teams had already been working together for more than a year and contributed heavily to the development of EIP-4844. Also called Proto-Danksharding, EIP-4844 will decrease L2 transaction fees by 10-100x. Coinbase is now a core contributor to the OP Stack as well, joining as the second core project team. This furthers Optimism’s vision of being a super-chain, where the OP codebase is continuously forked to create new chains that are optimized for different use cases. These new chains, such as Base, will have seamless interoperability with one another since they all use the OP Stack.
  • Algorithm:
  • Virtual Machine:
  • Development language used:

Transaction Details

How it works

Fees

  • Coinbase will contribute minimum 2.5% of Base sequencer revenue to Optimism Collective for RetroPGF & ecosystem projects (8-2023).

Upgrades

Staking

Validator Stats

Liquidity Mining

  • Optimism granting up to ~118M OP tokens (2.7% of supply) over 6 years to Coinbase (8-2023).

Scaling

Interoperability

Other Details

  • Base apps (8-2023):
    • Friend Tech adds photo sharing with key holders
    • StoryBase: fee per character collaborative writing, snippets minted as NFTs
    • Parody bike race: mint/steal NFTs of NYC Citi Bikes in 10 day race

Other Projects

cbETH

  • Announced (24-8-2022) its own Coinbase Wrapped Staked ETH on the Ethereum. cbETH can be sold or sent off-platform, while ETH2 will remain locked-up until a future protocol upgrade.

Coinbase Lend

"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."

Coinbase NFT

"In case you forgot, Coinbase still has an NFT marketplace—and it’s still not doing very well. Coinbase NFT announced on Wednesday that it is “pausing” future NFT drops, but specified that it is not shuttering its marketplace completely. Its Chief Product Officer Surojit Chatterjee also stepped away from the company just six months after Coinbase NFT’s lackluster launch. Since that launch in the spring of 2022, Coinbase NFT continued to release new features for its marketplace in an effort to attract new users, such as a bulk manage tool, rarity filters, and time-delayed listings. But according to a Dune Analytics dashboard, its efforts have not been very fruitful, as the marketplace has seen just $106 in total volume traded in the past 24 hours. Since its launch last year, Coinbase NFT has seen roughly $7.34 million in all-time total volume traded. To put that in perspective, rival marketplace OpenSea saw over $11.3 million in total volume traded in Ethereum NFTs just yesterday alone."

Oracle

Basics

"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

"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."

"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

"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

"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

  • The SEC issued crypto exchange Coinbase a Wells notice, warning the exchange that it identified potential violations of U.S. securities law (23-3-2023).
  • Base seemingly will be KYC only for users (1-3-2023):

"Coinbase has been a recognized money transmitter for years and is registered with FinCEN as a “Money Services Business”. You can learn more about Coinbase’s compliance efforts from their own website. Coinbase, has announced, via Bankless, that it will be running Base’s sole sequencer at launch. This means that Coinbase, a licensed money transmitter that is required to comply with the Patriot Act and Bank Secrecy Act, will be entirely responsible for processing all Base L2 transactions. This begs the question: will all funds that are bridged to Base require identify verification by Coinbase (KYC) before the bridging is allowed? If so, then Base will be the first-ever KYC-only Ethereum L2. Whether or not Coinbase will require KYC to bridge funds to Base, it is clear that they are being evasive about the issue by refusing to answer direct questions."

"Coinbase has agreed to pay a $100 million settlement with the New York Department of Financial Services (NYDFS), according to a consent order signed by the NYDFS superintendent Adrienne Harris on Jan. 4, 2023. New York’s financial regulator said compliance problems were detected and the exchange’s anti-money laundering controls were inadequate from 2020 through 2021."

"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."

Roadmap

  • Can be found [Insert link here].

Revenue

  • Coinbase’s total revenue was down -76% year-over-year from $2.5B to $605M (2-2023) according to Delphi Digital.

Usage

"Base has experienced over $175 million funneled into its decentralized finance (defi) protocol since its creation. The majority of value locked comprises 75,244 ether and nearly $26 million worth of the USDC stablecoin."

  • Since the mainnet launch of Base, it has attracted meme coin traders with tokens like BALD, COIN, and BASED on the network using the decentralized exchange LeetSwap. LeetSwap has recorded nearly $200 million in trading volume over the past day across 377,000 transactions, according to DEX Screener. Base’s public launch is slated for August. And at the moment, there’s no official way for traders to bridge Ethereum from its mainnet over to Base. However, a so-called Portal Proxy Contract allows developers to do just that. On Sunday alone, $54 million of Ethereum had been bridged to Base, according to a Dune Analytics dashboard. The day before, less than $750,000 worth of Ethereum was ported over to Base. (31-7-2023 by Decrypt).
  • 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."

"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."

  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."

Projects that use or built on Base

"Balancer is one of the launch partners and this means bringing Balancer Boosted Pools to Base from day one together with Aave and Euler Finance."

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.
  • Base seemingly will be KYC only for users (1-3-2023).

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)
  • Pankaj Gupta; VP Engineering at Coinbase
  • Nakul Gupta; Lead PM at Coinbase NFT Marketplace & Institutional Onboarding (invested in Shardeum, together with Pankaj)
  • When the bear market of 2022 started to hit hard, layoffs started and hiring stopped (4-6-2022):

"Coinbase announced earlier this year it intended to triple its headcount through the end of 2022. One of the recruits CoinDesk spoke to said he believed a few hundred people may have been in the recruitment and onboarding process this week. On Thursday, Coinbase Chief People Officer L.J. Brock announced that the company would “rescind a number of accepted offers.” And it appears to have wasted no time in doing so."

  • The company would later state the need (14-6-2022) to lay off 1,100 of its workers and prepare for an “extended” crypto winter, slashing its workforce by 18% because it “over-hired” during the previous bull run in crypto markets. Another 950 people would be cut (10-1-2023).

Investors & investments

Investors in Coinbase

Investments and funding done by Coinbase

"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."

"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

"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)."

Coinbase Custody

  • Member of POSA (10-7-2020).
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