What's Happening at Coinbase?
How to think about the company's recent promotions, organizational changes, and areas for growth
Acquisitions, executive hires, and major leadership promotions often suggest there may be more at work than meets the eye.
So when Coinbase recently announced that Jesse Pollak – the internal leader for Base, Coinbase’s layer-2 blockchain – had been promoted to also lead Coinbase Wallet and join the Coinbase executive team, it struck me as meaningful.
The broader picture suggests Coinbase may be reorganizing around a newly defined set of internal divisions:
Incumbent business lines – specifically, Coinbase’s exchange and institutional services.
Onchain business opportunities, spearheaded by Jesse Pollak.
Payments & commerce, enabled by the Coinbase Developer Platform.
All three are growth opportunities for Coinbase, but the first is really their bread & butter while the latter two are more emergent. If the move is successful, it feels like the type of moment we’ll hear Brian Armstrong mention in talks a few years from now – similar to how Brian Chesky talks about Airbnb’s organizational restructuring during Covid.
Here’s how I’m thinking about the different segments that encompass Coinbase.
Segment #1: Incumbent Products
At the core of Coinbase’s incumbent revenue streams lives its exchange product. The exchange services both retail and institutional customers. Historically, it’s also provided a strong platform on which Coinbase has built its product offerings. As users began to store more assets on the platform, Coinbase expanded into adjacent services that capitalize on those assets: blockchain rewards (staking), institutional custody, and stablecoin revenue.
These business lines are still growing. Revenue from transactions (read: trading) was over 2x higher in Q2 2024 than in Q2 2023. The same was true of both custodial fee revenue and blockchain rewards.
Stablecoin revenue comes via cash deposits. Coinbase acts as a distributor for Circle’s USDC stablecoin, meaning that it’s one of several partners that can convert fiat into USDC (an individual can’t just go to Circle and mint USDC). For Coinbase, funds come in the form of fiat deposits to the exchange. Once a customer has US dollars in their account, there’s zero cost to swap them into USDC to start earning yield. Circle monetizes the fiat deposits via investing in short term treasuries and shares that yield with their distributors. For Coinbase (a distribution partner), this added over $240M to its top line in Q2 2024.
From a scan of the executive page, it seems like Gregory Tusar and Max Branzburg are probably in charge of the institutional and consumer product lines, respectively. Tusar has been at Coinbase since 2020 (and has been working on institutional blockchain products since 2018). Branzburg has been at Coinbase since 2018. Both are industry vets.
Segment #2: Onchain Opportunities
Putting Base and Coinbase Wallet under the same leadership shows Coinbase is taking a more integrated approach to building onchain. It’s a move that I feel may be underappreciated.
Base’s mission is to bring more users onchain. Wallets are the port of entry for those users. Yet many wallets today (including Coinbase Wallet) still present users with significant friction, both when onboarding and trying to transact onchain. There’s too many clicks. Discovery is subpar. The list goes on.
Similarly, application developers are often acutely aware of where users drop off in the conversion funnel – whether it’s onboarding funds into the actual wallet, having to bridge funds from one chain to another, signing the message to approve the transaction, or something else. It’s possible and even likely that many of the app developers have ideas about how to design a better flow, but have previously lacked the time or connections to get those thoughts to the wallet builders.
Unifying the Base and Wallet teams under the same leadership should create a tighter feedback loop. It facilitates smoother information sharing from both sets of stakeholders (users and developers) and will be well-positioned to build a more integrated product, improving the experience for all parties.
My guess is that, as a result, Coinbase will become even more vocal about what users can do onchain. The wallet product improving makes it easier to showcase it in marketing materials; a one-click experience is much more appealing to consumers than a five-click one. More eyeballs on the wallet also makes it a meaningful discovery point for applications and assets within the Base ecosystem. Altogether, this reorganization creates a stronger foundation for Coinbase to grow and experiment with its onchain businesses.
Segment #3: Payments & Commerce
When I look at CDP, I see a suite of services for everything one would need to run a business entirely on crypto rails. Products include embedded wallet SDKs, Payment APIs, blockchain data, and commerce tools. The sum total is a package that enables merchants to easily accept payment in any token, custody and monetize those deposits, and off-ramp securely into fiat.
CDP also offers tools beyond pure payments infrastructure. This includes trading bots, exchange access, and connected credentials. It looks a lot like Coinbase asked “what infrastructure and access would AI agents need to engage in commerce and interact (autonomously) onchain?” and built a product suite around those needs. In other words, the aspiration seems to be Stripe for AI agents.
Coinbase is Still One Company
In reality, none of these divisions are cut-and-dry. The lines very clearly blur. For instance, should CDP-enabled trading bots that transact primarily on Base be considered part of segment #2 or #3? Similarly, if a merchant accepts USDC on Base as its primary source of payment, is that part of segment #1, #2, or #3?
The answer is that it doesn’t actually matter. Coinbase is one company, not three. All of the divisions likely talk to each other (and Pollak’s promotion to the executive team further supports the notion that Coinbase strives for strong internal communication between these businesses). I find the segment categorization useful primarily for thinking about where unsuspecting growth opportunities may lay for Coinbase. The incumbent business is well-studied and well-analyzed. The latter two – onchain opportunities and payments & commerce – feel more like high-slope startups within Coinbase and I’m excited to see them grow.