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SBF
@SBF_FTX
3) Yesterday I looked into Bakkt's SPAC. It did not look very good. idk maybe it'll be worth $10b soon because fuck everything.
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SBF
@SBF_FTX
1) BAKKT is about to go public. There are a number of "interesting" things in their deck. sec.gov/Archives/edgar
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SBF
@SBF_FTX
5) Well, it's hard to find a lot of them. But, roughly, it looks like they made about $1-2b of revenue last year, had moderately high expenses, and had something like ~50m customers, give or take.
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SBF
@SBF_FTX
6) The first thing that jumps out: FTX traded about 2x what Coinbase did last year. FTX did not make $1.5b of revenue. What's going on there?
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SBF
@SBF_FTX
7) Well, their fees are higher than FTX--something like 4x as high! But that still doesn't explain it.
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SBF
@SBF_FTX
9) Now, I want to tread lightly here--don't throw stones in glass houses! But I tried to buy $8 of BTC. The price I got was... $40,422. BTC is currently trading at $35,250. That's a 14.5% fee. 14.5% is a lot. (Maybe people should check out FTX!)
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SBF
@SBF_FTX
10) Well ok then. So, mostly this is the "Coinbase fee". This isn't a % fee, it's a $ fee; in this case, $0.99. On a $8 trade. So that's 12% right there. The other 2.5%? Well, that's the spread.
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SBF
@SBF_FTX
11) Ok, so now things start to line up more. If they traded $500m/day, and made $1.5b, that means that Coinbase made about 1% on their average trade. Which, presumably, is some blended rate between ~8bps on their "Coinbase Pro" trades, and 1-10% on their app trades.
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SBF
@SBF_FTX
12) A lot of people complain about Coinbase downtime, or lack of features, or ratelimits, or withdrawals. I wonder if Coinbase even cares. Its 'pro' fees can't have been more than 10-20% of its revenue, really: 8bps*$500m*365 = $150m.
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SBF
@SBF_FTX
13) Coinbase doesn't make money when people use its API, or go to prime.coinbase.com, or use their ratelimits. Coinbase makes its money when your high school classmate decides to buy their first $25 of BTC on the app.
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SBF
@SBF_FTX
15) For FTX, the answer is pretty simple. Just go to ftx.com/FTT. Last week, FTX had its first ever $2m buy/burn. Today, we're having a $3m buy/burn. More volume has exactly the expected effect.
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SBF
@SBF_FTX
16) For Coinbase.... I'm actually pretty curious. Today, Coinbase has $5b of volume. That's a lot! It's also half of FTX.
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SBF
@SBF_FTX
17) If this kept up for a year, would Coinbase make $300m? Or $15b? *Which* volume goes up? Is it
@AWice
? Or is it his high school classmate buying their first BTC? Is it
@cmsholdings
's bots, or Dan while he's bored in a meeting? Are they paying 1-10bps or 1-10%?
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SBF
@SBF_FTX
18) I don't know! I wish I did. All I can offer is the following. Here are some graphs from FTX.
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SBF
@SBF_FTX
19) On FTX: --Volume is up about 10x from a month ago --Active userbase is up about 1.5x So if FTX is any guide, most of the volume growth is the heavy duty traders; retail growth is smaller. Which would imply that Coinbase's revenue is up more like 50% than 500%.
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SBF
@SBF_FTX
20) But maybe Coinbase isn't like FTX. Maybe Coinbase really did have 10m users load their app to buy $100 each of BTC yesterday, each paying about $3 in fees. That would be, at least from Coinbase's perspective, impressive.
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