Coinbase (COIN)
Thesis verdict: holds, with conditions — the share of institutional derivatives and subscription services is genuinely rising, but the retail spot base is sliding so fast that the quarter swung to a loss; non-spot revenue is not yet enough to fully offset the double drag of high-fee retail attrition and macro rate swings.
Coinbase's core way of making money is to provide crypto-asset trading (spot and derivatives) to retail and institutional customers and take a fee on it; alongside that, it earns an interest share from managing USDC stablecoin reserves in partnership with Circle, network rewards from blockchain staking-validation services, and sequencer fees from running Base, its Ethereum layer-2 network. Its cash flow springs mainly from three sources: spreads and commissions on retail deposits and trades, bulk clearing fees from institutional clients, and macro interest earned on fiat reserves held at banks.
From the latest revenue picture for Q2 2026 (quarterly revenue of $1.220B, down 18.5% year over year), the business breaks down as follows:
The largest line is still retail trading, at $452M for the quarter, 37.0% of total revenue. But this base shrank violently, down $198M year over year — that single line explains 71.5% of the company-wide decline. Its core contractual metric is monthly transacting users (MTU, users who trade at least once a month), which has slid from 8.7 million a year earlier to 7.6 million.
The second pillar is stablecoin revenue, $292M for the quarter, 23.9% of the total, down a modest $16.77M year over year. This line is tied directly to the amount of USDC sitting on-chain and to the Fed's benchmark rate.
Institutional trading, the core of the strategic pivot, brought in $100M, 8.2% of revenue. It was the only growth engine in the whole of Q2, up 65% year over year against the tide (a $39.25M increase), with the increment driven entirely by the acquisition of derivatives giant Deribit; its core contractual metric hinges on institutional derivatives volume and institutional assets under custody.
Among the remaining subscription and services lines, other subscription and services recorded $114M (9.3%); blockchain rewards $83.34M (6.8%, down sharply by $61.19M, mainly on shrinking staked assets and coin-price weakness); interest and finance fees $66.13M (5.4%, up $6.81M); corporate interest and other $65.77M (5.4%); and other transaction revenue, including long-tail assets such as prediction markets, $47.41M (3.9%).
Seen through the value stack (a framework for locating where a company sits in its industry's technology and commercial chain), Coinbase shows a clear split between layers: at the bottom, the raw-material and input layer (spot trading fees) is being seriously deflated by low-fee and even zero-fee competitors; but the company has very cleverly built its core defenses at the highest layers — security, governance and compliance and orchestration, workflow and execution. Coinbase holds a New York BitLicense, a regulated trust charter and a CFTC futures commission merchant (FCM) license, making it almost the only compliant custody channel Wall Street giants dared to use when issuing spot ETFs in the post-FTX era. To a retail user it may be just a phone app for buying coins that can be swapped out at any time; to institutions, Coinbase Prime is deeply embedded in their underlying fund clearing, financing and compliance-audit workflows, with a very high replacement barrier.