Financial Report Analysis: Coinbase Q3 Earnings 2025

On October 31, 2025, Coinbase released its Q3 financial report. This timely report injected a much-needed boost into the liquidity-starved crypto industry. Total revenue reached $1.87 billion, a 55% year-over-year increase and a 25% quarter-over-quarter increase. Net profit was $433 million, compared to only $75.5 million in the same period last year. Earnings per share were $1.50, exceeding analysts' expectations by 45%. Wall Street analysts applauded, and J.P. Morgan upgraded its rating to "overweight" last week with a target price of $404. While many anticipated poor liquidity and lower-than-expected trading volume in the cryptocurrency market in Q3, Coinbase delivered a stellar performance, with consumer trading volume surging to $59 billion, a 37% increase from the previous quarter. Retail trading revenue reached $844 million. Furthermore, Coinbase has been consistently increasing its Bitcoin holdings. Through weekly dollar-cost averaging, it added $299 million to its Bitcoin holdings this quarter. As of now, its total Bitcoin holdings have reached 14,548. CEO Brain Armstrong stated in the company's earnings call, "'Everything can be traded' is central to the next phase of our development." In addition, Coinbase is integrating prediction markets, tokenized stocks, and other products into its platform. Behind the trend of everything being tradable, Coinbase is no longer just a guardian of cryptocurrency; it's transforming into a "crypto Apple ecosystem" connecting people and capital. Behind this acquisition of 14,548 BTC, what ambitions does Coinbase have in store? Wall Street applauds the turnaround: Base x USDC from a side business to a cash cow. Looking back from 2023 to the present, Coinbase's stock price has been like a rollercoaster, climbing from a low of $30 to over $300 today. This wasn't due to luck, but rather a two-pronged approach: Base and USDC. These two, originally "side businesses," have now become cash cows, and Wall Street's approval of their turnaround has been swift and direct. COIN Price Chart | Source: Tradingview First, let's talk about J.P. Morgan's upgrade to "overweight." On October 24th, analyst Kenneth Worthington stated in a report that "Coinbase's valuation is undervalued, with the potential opportunity for the Base token being worth $12-34 billion." Base, an Ethereum Layer 2 network incubated by Coinbase, was launched in 2023 as a "low-fee testing ground," but has now become a star. Where does this money come from? As an Optimistic Rollup, Base requires each transaction to be packaged and recorded on-chain by a single sequencer, resulting in low fees (averaging $0.01 per transaction), but a terrifying scale effect—daily transaction volume has repeatedly exceeded 5 million, double that of the mainnet. The sequencer model makes fee revenue a strong source of cash flow. Coinbase transferred all these fees to its own escrow account, citing "security and auditing" reasons, but the community criticized this as "centralized exploitation." Management responded in the earnings call that they would explore ecosystem revenue sharing in the future, such as returning a portion of the fees to developers or users, creating a positive feedback loop. Even more anticipated is the potential for a native Base token. J.P. Morgan predicts that if Base issues its native token, its market capitalization could reach tens of billions of dollars. What can the token do? It incentivizes usage elasticity; holders can participate in governance, stake to earn fee sharing, and even use it for gas fee discounts. With millions of daily active users and huge elasticity in fee revenue, if the token is launched, Base can transform from a "cost center" into a "profit engine" in no time. Looking at USDC, this stablecoin is a joint venture between Coinbase and Circle. The Q3 financial report shows that USDC's market capitalization reached a record high of $74 billion, and the average USDC balance on the Coinbase platform was $15 billion, a 9% increase quarter-over-quarter. The average USDC balance outside the platform was $53 billion, a 12% increase month-over-month. Stablecoin revenue was $355 million, a 7% increase month-over-month. Stablecoin revenue and blockchain revenue | Source: Coinbase Its revenue sources are diverse, including interest rate spreads (USDC reserves invest in US Treasury bonds, earning a 4-5% yield), custody fees (Coinbase Prime provides institutional custody, taking a 0.1-0.2% commission), clearing fees (cross-border transfer fees), and merchant revenue sharing (integrated into e-commerce platforms such as Shopify, taking a 1% commission). Why is USDC so profitable? Because it has penetrated merchant and cross-border settlement markets. Management revealed that USDC has a 15% penetration rate in cross-border payments, especially in emerging markets such as Latin America and Southeast Asia, where users use it to avoid foreign exchange fluctuations. For example, after Remitly and Wise integrated USDC, transfer costs decreased by 30%, and Coinbase benefited from this. More importantly, USDC is transforming from a "store of value" into a "payment medium." Sell-side analysts mentioned that Coinbase may expand its distribution, such as issuing L2-specific USDC variants or deeply integrating it with DeFi protocols. Timeline? Management said, "We'll see in the first half of next year." The synergy between Base and USDC is its trump card. Base uses USDC as its native gas fee, resulting in transaction costs as low as $0.001, attracting the DeFi and NFT ecosystems. Wall Street's praise essentially reflects Coinbase's shift from "volatility dependence" to "stable revenue generation." Previously, transaction revenue accounted for 80%, which was halved during bear markets; now, subscription services account for 40%, demonstrating strong counter-cyclical resilience. Of course, risks remain. Regulation is a double-edged sword—the SEC's scrutiny of stablecoins is becoming increasingly stringent, and Base's centralized sequencer may also attract attacks from "decentralization fundamentalists." But judging from the financial report, management is full of confidence: "We're not betting on the market, we're building infrastructure." Coinbase is taking a steady yet ambitious path from a side business to a cash cow. Coinbase's expansion resembles the Roman Empire, proceeding step by step, from exchange to custody, and then to the primary market. The most eye-catching acquisition in the Q3 financial report was the $375 million acquisition of the Echo blockchain financing platform on October 21st. From issuance and listing to trading and custody, Coinbase uses six anchors to secure its ecosystem, pushing itself towards becoming a "crypto Apple." Developers come and don't want to leave, institutions come and can't leave, and users can't live without it. First, let's talk about the technological infrastructure, the cornerstone of the Coinbase empire. The Base chain isn't just another Layer 2 blockchain; it's Coinbase's "iOS," compatible with the Ethereum ecosystem but with its core controlled in-house. Leading protocols like Aave and Uniswap have already joined, but Base's value lies in its "app store" attributes. Through the acquisition of Spindl (an on-chain advertising attribution tool), Coinbase can track user origins and conversion rates, similar to the App Store's recommendation mechanism, controlling traffic distribution. Developers want to acquire customers? They must use Spindl; Coinbase uses this to decide who appears on the recommendation list. The acquisition of IronFish addresses privacy shortcomings. Under intense regulatory scrutiny, Base integrates zero-knowledge proofs to balance compliance and user privacy, emulating Apple's privacy protection strategy. More importantly, Base directly connects to Coinbase's 100 million users, allowing developers to reach massive traffic immediately upon launch—an advantage that Arbitrum or Polygon cannot match. The capital formation system is the second pillar, and the acquisition of Echo is a major highlight. Echo is an on-chain capital succession platform founded by renowned crypto trader Cobie, and it operates the Sonar public offering tool. Echo has helped over 300 projects raise more than $200 million, such as Plasma's XPL token sale. Why did Coinbase choose it? Because primary issuance is the "upstream source" of crypto. Traditional VC models are closed, making it difficult for retail investors to participate; Echo allows projects to raise funds directly from the community, encompassing both private and public sales. The acquisition price of $375 million (cash + stock) is a drop in the ocean compared to Coinbase's $70 billion market capitalization, but its strategic value is enormous, filling Coinbase's gap in "capital formation." Echo fundraising trend chart | Source: Dune The integration roadmap is already taking shape. Echo will be integrated into the Coinbase ecosystem, utilizing Coinbase's compliance framework (KYC/AML) for issuance approval, Coinbase's transparent ledger for disclosure, Coinbase Exchange for secondary market making, and Prime for custody. The initial offerings will focus on crypto tokens, with a target size of $1 billion in Q1 of next year. For institutions, Coinbase will offer a settlement toolkit, real-time clearing, and a data API; for developers, Sonar will upgrade to support privacy-enhanced fundraising (zero-knowledge proofs to avoid sensitive disclosures). Ethena's on-chain crowdfunding platform, founded by KOL Cobie, has raised $51 million and completed 131 transactions. The rapid growth of its first project, Ethena's USDe stablecoin, demonstrates its potential. Echo's Sonar tool allows founders to self-manage token sales, reviving the 2017 ICO model, but things are different now—protected by the GENIUS Act, the regulatory framework is clear. Coinbase has officially stated that it will start with cryptocurrency token sales and expand to tokenized securities and real-world assets (RWA). This ambition extends beyond crypto; it aims to financialize everything, issuing stocks, real estate, and art on the blockchain. The final piece of the puzzle is the acquisition of Liquifi, which provides full lifecycle management of tokens—issuance, allocation, locking, and liquidity. Echo manages "who can raise funds," while Liquifi manages "how to operate and maintain," forming a closed loop. The institutional market is the third pillar. The Deribit acquisition is a milestone in crypto history, acquiring the world's largest derivatives exchange for $2.9 billion. Institutional clients account for 70% of its business, with daily trading volumes in the billions. Coinbase previously focused primarily on retail, with weak derivatives; now, it has addressed this weakness, significantly increasing options depth and futures liquidity. This is comparable to Goldman Sachs' investment banking + retail dual-track approach. Institutions are not just trading, but have also become seed users of Base/USDC. Management revealed that after the Deribit integration, the cross-selling rate reached 40%, with institutions expanding from derivatives to custody and clearing. The retail entry point is the fourth pillar. Coinbase's credit card is not just a payment tool, but the "final link" in the ecosystem. Partnering with AmEx, it targets the high-end market, with users spending an average of $3,000 per month, above average. Cashback of 2-4% in Bitcoin, linked to platform assets, with high holdings and proportions. At a deeper level, data and consumer habits are used for targeted marketing, recommending NFTs or DeFi. This model creates a closed-loop effect: users receive cashback by swiping their cards, invest the cashback amount in Base, thereby obtaining higher cashback and further stimulating more consumption. With regulatory support, this bridges fiat currency and crypto, lowering the barrier to entry. Content ecosystem is the fifth pillar. On October 20th, Coinbase spent $25 million to buy NFTs and relaunched the UpOnly podcast—a bullish show hosted by Cobie/Ledger. This is no coincidence, as it belongs to the Cobie group, the same group as Echo. This is about cultural positioning, using UpOnly to spread its philosophy and products, and enhance its community influence. Coinbase doesn't control advertising/creation, focusing purely on community tribute, which has sparked heated discussions. Combined with Echo, it forms a "content + capital" dual-engine, with podcasts exposing projects and Echo financing following. Future expansion will include Apple TV+-style services, with content becoming the stickiness engine. Regulatory barriers are the sixth pillar. Coinbase is listed domestically, subject to the SEC, and holds licenses in multiple states. After the GENIUS Act, its stock price rose 30%, highlighting the compliance advantages of USDC. It attracts traditional institutions, partners with JPMorgan, and allows Chase points to be converted to crypto. These barriers are high—Binance/OKX face pressure offshore, making it difficult for newcomers to overcome. Similar to the App Store's review process, it's strict in the short term but maintains quality in the long term. These pillars are not isolated, but form a closed loop. Developers raise funds using Echo/Liquifi, deploy on Base, acquire customers through Spindl, gain exposure through UpOnly, facilitate institutional Deribit trading, use Prime custody, facilitate retail credit card spending, and continuously optimize data. Coinbase is not buying companies, but weaving a network—from issuance to trading, from technology to culture, building a crypto "Apple empire." Laying the groundwork for the next era. If Base and USDC are current cash cows, the x402 Foundation is Coinbase's bold bet on the future. Imagine an HTTP code that has been dormant for 30 years suddenly awakens and becomes a bridge connecting humans and the machine economy. This isn't science fiction; it's a real-life scenario that unfolded on September 23rd, when Coinbase and Cloudflare jointly established the x402 Foundation, while Google's AP2 protocol followed closely behind, transforming the HTTP 402 "Payment Required" status code into a native machine payment process. The story begins with a clear access path. In Coinbase's ecosystem, Base acts like an efficient tollbooth manager, handling low-fee settlements of just $0.001 per transaction; USDC plays the role of a frictionless universal currency, avoiding exchange rate "roadblocks"; and Custody, as the "guardian" of institutional-grade security, handles all ledger entries. The core of the protocol is the revival of HTTP 402, a long-dormant code that has now become a "highway" for AI payments. Imagine an AI agent crawling Cloudflare's CDN data and encountering a 402 response. It doesn't stop; instead, it automatically initiates a USDC payment, confirms it instantly, and continues to retrieve content—all without human intervention. The lineup of partners is truly star-studded, with initial partners including Google (launching with AP2), Adyen, PayPal, Mastercard, and developer platforms such as Etsy and Service Now. The pilot phase has begun, with Cloudflare's Agents SDK being the first to integrate x402 and is privately testing a "pay per crawl" mode—AI crawlers voraciously access massive amounts of web pages, with fees settled daily. Google's AP2 extends x402, supporting mixed payments of credit cards and stablecoins, with the first B2B procurement pilots launched on the Cloud Marketplace, involving Intuit and Salesforce. Coinbase acts as the "bridge architect" for crypto here: x402 settles through Base, while AP2's Mandates (digital contracts) act like smart sentinels, ensuring that every step of authorization and auditing is flawless. Why does AI need this "payment script"? Because AI agents are about to "learn to spend money for you." Currently, AI like ChatGPT is still in the era of human order placement and payment, but in the future, they will autonomously shop or subscribe to services, requiring a reliable payment framework. AP2's Intent/Cart Mandates act as a "plot twist" to prevent fraud, allowing users to pre-sign a budget, the agent generates a shopping cart, and the entire process is traceable. x402 represents the "climax" of Crypto's instant settlement, using stablecoins to bypass bank delays. Gartner predicts that the AI ​​payments market will surge to a trillion dollars by 2030, with Crypto accounting for 10%. For Coinbase, the result of this story is that Base benefits from the low-fee advantage. Ten years ago, Coinbase started by facilitating human transactions, even raising funds in China, braving wind and rain. Ten years from now, it's more like laying an underground network: Base handles settlements, low-cost and efficient; USDC handles clearing, ensuring stable circulation; Echo handles issuance, securing an upstream position; and x402 connects to "machines that spend money" at the remote end. This Q3 financial report is a milestone, with total revenue of $1.87 billion and net profit of $433 million, but behind the numbers lies an imperial blueprint—from volatility dependence to stable rent collection; from an exchange to a full-stack hub. The future of crypto isn't about betting on prices, it's about building infrastructure. Coinbase's ambition, like Rome's road network, connects everything. In the next decade, when AI agents are everywhere, Coinbase may already be the "Federal Reserve of the digital economy." But don't forget, imperial expansion always has its frontiers—regulation, competition, and black swan events. Investors, hold on tight; this show has only just begun.