Last week, Coinbase announced the testnet launch of its new native Ethereum Layer 2 network, Base. According to the official blog post, Base offers a secure, low-cost, developer-friendly way for users to build dApps. On its part, Base is built on the MIT-licensed OP Stack and is powered by Optimism.
In a recent article, we analyzed ten reasons why Base’s launch is a “big deal.” In this article, we will examine how Base can help Coinbase elevate its earnings.
Also Read: 10 Reasons Why Coinbase’s Ethereum L2 ‘Base’ Is a “Big Deal”
In a recent explainer thread on Twitter, Tom Dunleavy, Former Senior Analyst at Messari, laid out why Base could go on to double Coinbase’s revenue and profits in 2023. Using the KYC numbers as a reference, Dunleavy pointed out that the platform had over 110 million verified users.
Further bifurcating, he pointed out that only ~10m of them are “transacting users,” or active market participants, who are genuinely inclined towards crypto. Elaborating on the same and putting forth his hypothesis, he said
“If we assume 50% of these users are interested in exploring crypto native applications we get 5m BASE users on day 1.”
Users will typically need a wallet to sign up for Base. The analyst hypothetically claimed that 50% of those 5 million users would opt for a Coinbase wallet over another solution, solely because of ease of access. That brought the new number to 2.5 million Coinbase wallet users. Now, these users will need to swap assets. They could use the native swap function or a solution like Uniswap to do the same.
Also Read – Base: Coinbase Announces New Ethereum L2 Network’s Testnet Launch
Faceoff with Metamask
To set the context, the analyst then went on to give an insight into Metamask’s swap volume during different conditions, i.e., the bull and bear markets. Using visual depictions from Dune Analytics, he tweeted,
“Bear market: $200k-$500k a day in swap revenue across 4k-5k DAUS
Bull market: $500k-$2m a day across 6k-7k DAUs”
Continuing, the analyst stated that even if 1% of the 2.5 million users actively use Coinbase wallet swap, the overall number will be ten times higher than Metamask. Elaborating on the same further, Dunleavy said,
“If we assume a similar take rate to metamask we get 10x the daily revenue or $2m to $20m a day. $60m to $600m a MONTH. Just on swaps. PURE PROFIT.”
Summarising it all in one go, the analyst concluded,
“Through BASE and coinbase wallet native swaps Coinbase could be adding roughly ~$0.7B (Bear market)- $7B (bull market) annually to its bottom line in profit. Coinbase annual revenue was $3.2B in 2022 and $7.8B in 2021.”