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SBF
@SBF_FTX
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@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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