JPMorgan
JPMorgan also has calculated that Coinbase's partnership with USDC issuer Circle could potentially add about $700 million in total revenue.
"We see the potential for institutional investors to hold less USDC given the opportunity cost of holding quasi-cash that doesn't offer a yield. We also see retail holding less of its fiat at Coinbase since it doesn't get a yield. As such, we see the potential for USDC balances and fiat balances to decline for Coinbase," Worthington wrote in a note.
In addition, Coinbase will likely benefit from an Ethereum Merge that occurred last week, in which the platform switched from proof-of-work to proof-of-stake for how it conducts transactions. JPMorgan has estimated that Coinbase has a 15% market share in Ethereum assets, and Worthington has implied that Coinbase's market share is likely biased toward institutions, which are much more inclined to take stock in Ethereum or Bitcoin.
From this Merge, JPMorgan approximates that Coinbase will be able to come up with incremental yearly staking revenue of $650 million, with Ethereum at $2,000 and a 5% yield.
"Coinbase is bigger in [ether] than was intuitive to us, thus leading directly to a bigger revenue opportunity," JPMorgan wrote in a statement.
According to Goldman Sachs
JPMorgan analysts also have confirmed that Coinbase is in a spot to vastly benefit from the Merge, but Goldman believes Coinbase still has weak areas to improve upon in terms of sell rates.
"We remain sell rated as we believe the profitability profile is likely to remain weak given the depressed trading environment and the company's target for roughly break-even margins over the intermediate term," Goldman's analysts said.
- https://www.coindesk.com/business/2022/09/08/crypto-exchange-coinbase-to-benefit-near-term-from-staking-revenues-after-ethereum-merger-goldman-says/
- https://www.coindesk.com/business/2022/08/17/coinbase-will-be-meaningful-beneficiary-of-ethereum-merge-jpmorgan-says/
- https://www.coindesk.com/business/2022/09/16/coinbase-could-earn-12b-in-revenue-next-year-from-higher-interest-rates-says-jpmorgan/