Coinbase Strategic Interpretation: DEX Will Surpass CEX Products and International Expansion

Author: Kunal G, encryption analyst; Translator: Golden Finance xiaozou

The Coinbase investor relations team invited me and several analysts deeply engaged in the encryption field to discuss the company’s first-quarter performance. The participation of CEO Brian Armstrong and CFO Alesia Haas broadened the topic far beyond quarterly performance, delving into Coinbase’s long-term strategy.

The following are the core points I have distilled for encryption investors. These interpretations represent only my personal views and are not official statements from Coinbase. Some information is cited from publicly disclosed documents by Coinbase.

1**、DEX will eventually surpass **CEX

Coinbase firmly believes that the future belongs to the on-chain world. When I mentioned the increasingly fierce competition among decentralized exchanges (DEX), Brian candidly stated that he ultimately expects the trading volume of DEXs to surpass that of centralized exchanges (CEX). This view aligns with my own, but I was impressed by his frankness.

Coinbase’s strategy is to allow users to trade assets directly through the Coinbase wallet/frontend, thus capturing value order flow during on-chain settlement. This can be understood as Coinbase’s practice of the “DeFi-CeFi hybrid model.”

In addition, Coinbase has made significant investments in DEX through Coinbase Ventures. These investments deliberately avoided acquisition forms to ensure that the underlying infrastructure remains decentralized.

It is worth mentioning that Coinbase’s venture capital holdings are valued at cost, a fact that the market has not fully recognized. If the encryption sector continues to grow, these investments could yield asymmetric returns—something that traditional finance (TradFi) analysts often fail to understand.

2**、**Competition will expand the industry’s pie

Some analysts question: With regulations becoming clearer, will the entrance of traditional financial giants like Robinhood or Stripe threaten Coinbase’s market dominance? Coinbase holds a negative stance, believing that traditional financial players are actually expanding the overall market size, which will benefit products like USDC, Base, and Coinbase custody. For example, Stripe has chosen USDC as the settlement currency for its new crypto payment channel. The increase in USDC circulation means growth in Coinbase’s revenue, and Stripe has become a demand driver rather than a competitor.

In direct competition, Coinbase believes that its focus on encryption and more comprehensive product offerings create a lasting advantage. Most traditional financial companies only dip their toes with small teams and retract during bear markets.

However, the operational capabilities of these traditional financial companies are usually stronger than those of the competitors that Coinbase has faced in the past, so the competition they bring will be exceptionally fierce.

3**、**Products and International Expansion

Coinbase has $10 billion in cash lying on its balance sheet and is currently investing heavily to expand its product matrix. Coinbase announced the acquisition of the leading cryptocurrency options exchange Deribit, which will not only enrich its product line but also, according to CFO Alesia Haas, is expected to enhance adjusted EBITDA.

This quarter, several small acquisitions were completed, among which the on-chain advertising platform Spindl is particularly noteworthy. Although the team has not yet made significant moves, it may help Coinbase achieve wallet and frontend monetization more efficiently in the future.

Coinbase is working to launch perpetual contract products for its US customers. The product is already available to international users, but has not yet received approval from US regulators.

At the same time, Coinbase is also vigorously expanding into international markets. Recently, the company not only obtained a full operating license in Argentina but also completed its registration with the financial intelligence unit in India. I am personally looking forward to their upcoming entry into the Indian market.