A common saying in crypto is that bear markets are a good time to build the next set of mainstream products and applications. Coinbase, the largest crypto exchange in the US, wants to make sure this development happens on its platform.
“We saw the DeFi summer in 2020, then we saw the NFT spring in 2021. Next cycle it’s going to be Web 3.0’s turn,” said Coinbase Chief Product Officer Surojit Chatterjee, referring to the concept of a more decentralized internet with reduced corporate control. “But we realized that to grow this ecosystem, we need to help developers because we can’t figure everything out ourselves.”
In an exclusive interview with Forbes, Chatterjee explained that this help comes in the form of a technology stack, called Node, that will help everyone from developers of non-fungible tokens (NFTs) and games to entrepreneurs with decentralized finance to build applications that automatically run on blockchains like Ethereum. can communicate. . “If you’re a developer, the first thing you need to do is spin up a blockchain node so you can read/write to the blockchain, query data, and monitor your application. It’s very complex and not everyone Node will empower developers to launch and manage nodes in a very simple and easy-to-use platform.
Here’s what it all means: Imagine a developer wants to build an NFT trading platform. They will have to create a website and interface for users. However, since this is a blockchain-based application, it also needs a way to communicate with the platform so that any transactions are published across the network. These functions can require completely different skills, and if the two platforms don’t sync properly, there can be lost tokens, poor user experiences, or security vulnerabilities.
Node will start by supporting Ethereum, with the expectation of moving to other blockchains.
For Coinbase, the launch of Node represents a new phase of Coinbase Cloud, a software platform that provides a complementary set of services to the trading business that dominates its revenue base. Originally launched as a staking platform aimed at institutions using cryptocurrency as collateral as they seek to earn more by supporting its blockchain, Coinbase Cloud is now aiming to be the launchpad for a whole range of Web 3.0 – applications.
In fact, it was one of five prioritized products listed by CEO Brian Armstrong during Coinbase’s Q2 analyst call last month—others include its self-indulgent wallet and premium brokerage offering—when the company revealed it had a lost a massive $1.1 billion amid the crypto downturn that sent its stock down 72.94% year-to-date.
However, one bright spot of the results was the growth in the exchange’s Subscription and Services products, which grew by 44% year-on-year. In fact, Subscription & Services revenue contributed 18% to total net revenue, up from 4% a year earlier. The company does not break these numbers down into specific business lines.
Chatterjee is optimistic about this trend continuing, but he also preaches patience. He declined to provide any financial or adoption goals and figures. “I think it’s too early to talk about that. First, we want to build a great product that pleases the customers and then numbers and metrics will follow.”
As for the potential customers, it is also important to note that Coinbase is not developing this product in a vacuum. In fact, it competes against two heavyweights in the industry. One is Alchemy, a $10.2 billion firm that supports eight different blockchains like Ethereum and Solana, 10 million end users and $100 billion in transaction volume. In addition, Ethereum-focused Infura, which is a hub of Ethereum.
To beat this competition, Chatterjee first puts his faith in Coinbase’s strong track record for security and ease of use, along with the intuitive nature of its interlocking products. “It’s 1+1 = 10,” he said, referring to abilities like strike, save and identity. “Plus, as a developer, you can access millions of users.”
Long-term success may also depend on Coinbase’s ability to strike the right balance between offering access to a centralized product suite that runs on top of decentralized blockchains, something privacy-conscious users may find troubling. “Blockchain computer data security models are decentralized, and we are not changing any of them. We are creating easy access to blockchain,” Chatterjee says. He also claims that the company will not collect individualized user or transaction data, a core concern for users of mainstream tech companies like Facebook and Google.
This point is especially relevant today after the US Treasury’s Office of Foreign Assets Control last month approved Tornado Cash, an open source platform that can be used to obfuscate and break financial transaction traces. Armstrong has pushed back against what he sees as government overreach, going so far as to fund a lawsuit against the Treasury and claiming Coinbase will exit its Ethereum business if it is pressured by the US government to block specific transactions.
When asked if Coinbase Cloud could allow the company to censor activity on apps powered by its platform, Chatterjee claims that the company does not have the ability to take such actions. “It is fundamentally different [from Tornado Cash]. We are just an entry layer.”
“I am excited about the product. It’s a free service for developers to build Web 3.0 products in minutes.”