Opportunities for the Crypto Unicorn

This week I hope to address the major opportunities that Coinbase can exploit to maintain or grow its $8B valuation. The first major area of potential is the development of a decentralized exchange. These are becoming more popular as the crypto community returns to its roots that focused on privacy and user controlled data. Decentralized exchanges such as 0x and IDEX have seen an increase in popularity and many other decentralized exchanges are being built. Coinbase may be able to follow Binance’s model of creating a decentralized exchange and aim to eventually shift most of its customers to the platform. They can also create a proprietary coin, similar to Binance coin.

Coinbase has also made a number of acquisitions that could provide synergies and new revenue streams for the company. In particular, the acquisition of Paradex is Coinbase’s attempt into expanding to the decentralized exchange space. Second, a controversial topic from humanitarian standpoint is the acquisition of Neutrino, a data analytics program that can help analyze transactions on a blockchain. This sparked some negative feedback from public opinion as the founders of Neutrino have a history of providing service to countries with poor humanitarian track records.

Lastly, while a large feat, Coinbase can try to expand to bring more traditional financial tools to the crypto space. Some of these tools could include ETFs (although this would require significant regulatory approval), custodial services for institutional investors, and derivatives such as futures, options, and swaps. This would give Coinbase significant first mover advantage and hopefully help digital assets as a brand. This could help institutional investors enter the space as they have more sophisticated instruments at their disposal to generate alpha and protect their downside. They would also have strong brand power backing a potentially more trustworthy custody and treasury service.