Exchanges Shift Focus from Trading to New Products Amid Dwindling Revenues

As major cryptocurrency exchanges shift their focus to new products and diversify their revenue streams, trading revenue is becoming a smaller part of their business.

The largest listed crypto exchanges, Coinbase, Bullish, and Gemini, saw a drop in trading revenue quarter-on-quarter during the second quarter of this year, while increasing their investment in newer products such as stablecoin products and prediction markets.

For example, Coinbase reduced its expenses, including a 14% staff cut in May, but allowed its USD Coin (USDC) stablecoin rewards to grow in Q3. The company said average USDC held in Coinbase products jumped 44% in a year to $20 billion, capturing around half of all USDC economics.

Gemini increased its focus on prediction markets by tripling the number of market makers this year and started paying rebates to those firms and rewards to users of the prediction market. However, while the number of bets almost doubled in the quarter, Gemini received only 18% more revenue from this business ($524,000).

A potential return of the bull market could revive trading revenues while intensifying competition over fees and users.