Coinbase's $200 Million Side Door
Coinbase's fastest-growing product is not crypto trading. It is prediction markets.
Reporting third-quarter results on October 29, Coinbase said its prediction markets business passed $200 million in annualized revenue, up from more than $100 million in the second quarter. Revenue from the product has compounded at 82% per quarter since launch, daily traders rose more than 60% in the quarter, and CEO Brian Armstrong called it one of the fastest-growing products by revenue in Coinbase history.
The detail that matters: more than half the contracts traded in Q3 were non-sports. Prediction markets are pulling in users who then trade crypto — Coinbase says prediction traders drive incremental spot volume — and the revenue is, in CFO Alesia Haas's words, less correlated to crypto volatility.
Next comes vertical integration. The CFTC cleared Coinbase Clearing LLC as a derivatives clearing organization on September 28, and Armstrong told investors Coinbase can now list its own prediction contracts instead of only routing flow to partners. In a slow crypto quarter, the side door is becoming a main entrance.
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