Conversation

3) I almost wanted to end the thread there, because I really do think that's the headline result! But there are a lot of other interesting tidbits.

115

4) First of all, where does that revenue come from? Most analyses I've read of this get it wrong. They'll talk breathlessly about the growth in subscription revenue (82%!) and point to custody, staking, etc. But that's not the right way to think about it:

119

5) Their "transaction revenue" (trading fees etc.) was $1.9B. Their "subscription revenue" (custody, staking, etc.) was $0.1B. Their subscriptions grew quickly! But that's still just 5% of revenue. 95% is trading fees.

176

6) To be fair, I've been guilty of this too. I'll talk about growth metrics in FTX's margin borrow/lending book, but the truth is that, for FTX--like Coinbase, and like most crypto exchanges--most of the revenue comes from trading fees.

182

7) Another interesting thing to note here: retail vs institutional. In Q2, Coinbase made $1.8B on retail fees, and $0.1B on institutional fees. So 90% of their revenue is from retail trading fees, 5% instos, and 5% custody/staking.

Quote Tweet

Jan 12, 2021

1) The other crypto IPO

Show this thread

139

8) Again, reports will talk a lot about the institutional clients Coinbase is winning, and that really is important to the future of their business! But I think they often miss the numbers here. When it comes to retail, Coinbase blows everyone else out of the water.

143

9) In fact! In 2021Q2, Coinbase made $100m revenue on institutional trading fees. FTX made... $100m. I'm actually not sure which made more on institutional trading fees; they're within a few % of each other. But on retail, Coinbase is massively bigger than FTX.

217

10) How about expenses? Coinbase's are... impressive.

118

11) Coinbase had $1.3B of expenses in 2021Q2 alone. Removing one-time costs (e.g. listing), its revenue was $2B and its EBITDA was $1B. So they had about $1B of expenses in 2021Q2, for a run rate of $4B/year.

129

6:32 AM · Aug 14, 2021Twitter Web App

12) This is roughly evenly distributed between --"transaction expenses" (gas?) --Tech --Marketing --Payroll They spent roughly $250m on each. They had ~2k employees, so that implies ~$400k/year/employee, which makes sense given the workforce.

Replying to

13) For context, FTX's expenses in 2021Q2 were around $50m (excluding buy/burn). The big differences were.... I guess everywhere? I guess 5% of the expenses aren't surprising given we also have 5% of the employee headcount.

159