CoinbaseQ3 earnings report shows new trend: non-transactional revenue is becoming a pillar of growth
Authors: Lin Wan Wan, Kaori
Original title: Q3 Earnings Report: The price of the currency is cold, but Coinbase's money-making machine is heating up
On October 31, 2025, Coinbase released its Q3 earnings report. This report card came at the right time to inject a dose of strength into the underliquid crypto industry.
Total revenue was US$1.87 billion, up 55% year over year and 25% month on month. Net profit of $433 million was only $75.5 million in the same period last year. Earnings of $1.50 per share beat analysts' expectations by 45%. Wall Street analysts applauded. J.P. Morgan adjusted the rating to an increase last week, with a target price of $404.
Just when many people expected the liquidity of the coin industry to be poor and trading volume to fall short of expectations in the third quarter, Coinbase gave a perfect answer. Consumer transactions jumped to $59 billion, an increase of 37% over the previous quarter. Retail transaction revenue reached $844 million.
Other than that, Coinbase has been increasing Bitcoin. Bitcoin holdings have increased by a cumulative total of $299 million this quarter through weekly fixed investments. Up to now, its total Bitcoin holdings have reached 14,548.
CEO Brain Armstrong said during the company's earnings call: “Everything can be traded” is central to the next phase of our construction. In addition to that, Coinbase is integrating prediction markets, tokenized stocks, and other products into its platform.
Behind the fact that everything can be traded, Coinbase is no longer a cryptocurrency night watchman; it is becoming a “encrypted Apple ecosystem” connecting humans and capital.
What ambitions did Coinbase lay out behind this 14,548 BTC holdings increase?
Wall Street's “turnaround praise”: Base×USDC from sideline business to cash cow
Looking back to 2023, the stock price of the first crypto stock Coinbase has been like a roller coaster, climbing from a trough of $30 to above $300 today, not by luck, but by walking on two legs: Base and USDC.
These two were originally “side jobs,” but now they have become cash bullies, and Wall Street reviews are coming quickly and directly.
COIN price chart | Source: Tradingview
First, J.P. Morgan's rating was upgraded to “gain weight.”
On October 24, analyst Kenneth Worthington stated bluntly in the report that “the valuation of Coinbase is undervalued, and the potential opportunity value of the Base token is $120-34 billion.”
Base is an Ethereum layer 2 network incubated by Coinbase. It was only a “low fee testing field” when it launched in 2023, but now it has become a star.
How did this money come about? As an optimistic rollup, each transaction requires a scale effect superimposed on a single sequencer (sequencer). Although the fee is low (average $0.01 per transaction), the scale effect is terrifying — the number of daily transactions has exceeded 5 million, which is double that of the main network. The sequencer model makes expense revenue a strong source of cash flow.
Base sequencer revenue | Source: Dune
Coinbase transferred all of these fees to its own escrow account on the grounds of “security and audit,” but the community once complained that this was “centralized blood suction.” Management responded at the earnings conference to explore ecological profit sharing in the future, such as returning part of the fee to developers or users, forming a positive feedback cycle.
More to look forward to is the potential native Base token.
J.P. Morgan predicts that if Base issues native tokens, the market capitalization could reach tens of billions of dollars.
What can tokens do? Stimulate flexibility in use, and holders can participate in governance, pledge to earn a share of fees, and even use it to discount gas fees. There are millions of daily active users, and the flexibility of fee revenue is huge. If the token is landed, Base will soon change from a “cost center” to a “profit engine.”
Also look at USDC, this stablecoin is a combination of Coinbase and Circle.
The Q3 earnings report showed that USDC's market capitalization reached a record high of $74 billion, and the average balance of USDC within the Coinbase platform was $15 billion, up 9% from the previous month. The average balance of USDC off-platform was $53 billion, up 12% month-on-month. Stablecoin revenue was $355 million, up 7% from month to month.
Stablecoin Revenue and Blockchain Revenue | Source: Coinbase
It has a variety of revenue sources, such as interest spreads (USDC reserves are invested in US bonds to earn a yield of 4-5%), escrow fees (Coinbase Prime is managed by institutions, with a margin of 0.1-0.2%), clearing fees (cross-border transfer fees), and merchant profit sharing (integration into e-commerce such as Shopify, with 1%).
Why is USDC so profitable?
Because it infiltrates merchants and cross-border payments. Management revealed that USDC's penetration rate in cross-border payments is 15%, especially in emerging markets such as Latin America and Southeast Asia, where users use it to avoid foreign exchange fluctuations. For example, when Remitly and Wise integrated USDC, transfer costs were reduced by 30%, and Coinbase got a share.
More importantly, USDC is changing from a “storage tool” to a “payment medium.” Seller analysts mentioned that Coinbase may expand distribution, such as issuing L2 exclusive USDC variants, or being deeply tied to DeFi protocols. A schedule? The management said, “We'll find out in the first half of next year.”
The synergy between Base and USDC is a killer. Base uses USDC as a native gas fee, with transaction costs as low as $0.001, attracting the DeFi and NFT ecosystem. The essence of Wall Street praise is to see Coinbase shift from “dependency on volatility” to “stable rent collection.”
In the past, transaction revenue accounted for 80%, and in the event of a bear market, it falls short; now subscription services account for 40% and are highly resistant to cycles.
Of course, there are risks.
Regulation is a double-edged sword — the SEC is increasingly scrutinizing stablecoins, and Base's centralized sequencer may also attract attacks from “decentralized fundamentalists.”
However, judging from financial reports, management is full of confidence: “We are not gambling on the market; we are building infrastructure.” On this path from a side business to a cash cow, Coinbase has followed a steady and ambitious path.
The empire continues to expand
Coinbase expanded like the Roman Empire, step by step, from exchange to escrow to the primary market. In the Q3 earnings report, the most impressive merger and acquisition was the $375 million acquisition of the Echo blockchain financing platform on October 21.
From distribution and listing to trading and hosting, Coinbase uses six anchors to anchor the ecosystem and promote itself as an “encrypted version of Apple.” Developers come and don't want to leave; institutions can't get out when they come in; users are inseparable from using it.
First, let's talk about technical infrastructure, the cornerstone of the Coinbase empire.
The Base Chain is not yet another Layer 2, but Coinbase's “iOS”. It is compatible with the Ethereum ecosystem, but the core is controlled by itself.
Leading protocols such as Aave and Uniswap have already settled in, but the value of Base lies in its “app store” attributes. Through the acquisition of Spindl (an on-chain ad attribution tool), Coinbase can track user origin, behavioral conversion, similar to the App Store's recommendation mechanism, and control traffic distribution. Developers want to get customers? Spindl must be used, and Coinbase determines who is on the recommended list based on this.
Iron Fish's acquisition made up for the privacy gap. Under high regulatory pressure, Base integrates zero-knowledge proofs, balances compliance and user privacy, and mimics Apple's privacy protection strategy. More importantly, Base is directly connected to Coinbase's 100 million users, and developers can access massive traffic as soon as it goes online. This is an advantage that is hard to beat Arbitrum or Polygon.
The capital formation system is the second pillar, and the Echo acquisition is the highlight.
Echo is an on-chain capital succession platform founded by renowned crypto trader Cobie, and has Sonar's public offering tools. Echo has helped over 300 projects raise over $200 million, such as Plasma's XPL token sale.
Why is Coinbase looking at it?
Because Tier 1 issuance is Crypto's “upstream water source.” The traditional VC model was closed, making it difficult for retail investors to participate; Echo made the project raise funds directly from the community, and private sales were completely sold out. The purchase price of $375 million (cash+stock) is minor to Coinbase's $70 billion market capitalization, but the strategic value is huge, and it makes up for Coinbase's “capital formation” shortcoming.
Echo Fundraising Volume Chart | Source: Dune
The integration roadmap is now in shape. Echo will embed the Coinbase ecosystem, issue and approve Coinbase's compliance framework (KYC/AML), disclose the use of Base's transparent ledger, connect second-level market-making to the Coinbase Exchange, and host automatic access to Prime. The first batch of issuance categories focused on cryptocurrencies, and the volume target was to reach $1 billion in Q1 next year.
For institutions, the Coinbase settlement toolkit, real-time clearing, and data APIs; for developers, Sonar will upgrade to support privacy-enhanced fundraising (zero-knowledge proof to avoid sensitive disclosure). The on-chain crowdfunding platform, founded by KOL Cobie, has raised 51 million dollars and completed 131 transactions. The rapid growth of the first project, Ethena's USde stablecoin, proved its potential.
Echo's Sonar tool allows the founders to independently host token sales and revive the 2017 ICO model, but now it's not what it used to be — it's protected by the GENIUS Act, and the regulatory framework is clear. Coinbase officially stated that it began with the sale of crypto tokens and expanded to tokenized securities and real world assets (RWA).
It's ambitious. It's not just Crypto, but the financialization of everything, and the distribution of stocks, real estate, and art on the chain.
Complementing the puzzle is the Liquifi acquisition, which provides full lifecycle management of the token — issuance, distribution, locking, and liquidity. The Echo tube “who can finance it” and the Liquifi tube “how to operate and maintain” forms a closed loop.
The institutional market is the third pillar. Deribit's merger and acquisition is a milestone in crypto history, taking over the world's largest derivatives exchange for $2.9 billion, accounting for 70% of institutional clients, and billions of dollars a day. In the past, Coinbase was mainly retail, and derivatives were weak; now, by making up for shortcomings, the depth of options and futures liquidity have increased dramatically.
This is the standard for Goldman Sachs's investment bank+retail dual cycle. Institutions don't just trade; they also become Base/USDC seed users. Management revealed that after Deribit's integration, the cross-selling rate reached 40%, and the institution expanded from derivatives to escrow and liquidation.
Retail entrances are the fourth pillar. The Coinbase credit card is not a payment instrument, but the “last link” of the ecosystem.
Partnering with AmEx, high-end positioning, users spend an average of $3,000 per month, which is above average. The cashback is 2-4% of Bitcoin, which is linked to the platform's assets, has many positions, and the ratio is high.
Deeper is data. Consumption habits are used for precision marketing, recommending NFTs or DeFi. This model forms a closed loop effect. Users swipe cards to get cashback and invest the rebate amount into Base, thereby obtaining higher rebates and further stimulating more spending. With regulatory support, this bridges fiat currency and crypto, lowering the threshold.
The content ecosystem is the fifth pillar. On October 20, Coinbase spent $25 million on NFTs to relaunch the UpOnly podcast, the God of Bull Market program, hosted by Cobie/Ledger. It's no coincidence that the Echo belongs to the same Cobie family.
This is a cultural card. UpOnly spreads ideas and products, and enhances community influence. Coinbase doesn't control advertising/creation; it's pure community tribute, which sparked a buzz. Combined with Echo, a “content+capital” dual round was formed. The podcast revealed the project, and Echo financing followed up. In the future, it will expand to Apple TV+ services, and content will become a sticky engine.
The regulatory moat is the sixth pillar. Coinbase is listed locally, subject to the SEC, and has a multi-state license. After the GENIUS Act, stock prices rose 30%, highlighting USDC compliance advantages. Traditional institutions prefer, JPMorgan collaborates, and Chase points are transferred to Crypto. This barrier is high — Binance/OKX is under pressure offshore, making it difficult for newcomers to overcome. Similar to App Store reviews, strict short-term, long-term quality assurance.
These pillars are not isolated, but rather closed loop. Developers use Echo/Liquifi financing, deployment on Base, customer acquisition, UpOnly exposure, institutional Deribit transactions, Prime hosting, retail credit card spending, and data cycle optimization.
Coinbase isn't buying a company; it's weaving a web — from issuance to trading, from technology to culture, to building a crypto “apple empire.”
Laying out the next era
If Base and USDC are the current cash bulls, the x402 Foundation is Coinbase's big gamble for the future.
Imagine an HTTP code stuck in the dust for 30 years, suddenly waking up as a bridge between humans and the machine economy.
This is not science fiction, but a true story that unfolded on September 23. Coinbase and Cloudflare teamed up to establish the x402 Foundation, and Google's AP2 agreement progressed as a result, transforming the HTTP 402 “payable” status code into a machine-native payment process.
The beginning of the story stems from a clear access path. In the Coinbase ecosystem, Base is like an efficient toll booth administrator, responsible for low fee settlements, only $0.001 per transaction; USDC acts as a frictionless general currency to avoid “roadblocks” in exchange rates; and Custody, as the “guardian” of institutional-level security, handles all billing.
The core of the protocol is the revival of HTTP 402, a code that has been idle for many years and is now a “highway” for AI payments. Imagine an AI agent crawling Cloudflare's CDN data and encountered a 402 response along the way. Instead of stopping, it automatically initiated a USDC payment. After instantaneous confirmation, it continued to obtain the content without human intervention.
The lineup is star-studded, with initial partners including Google (launched with AP2), Adyen, Paypal, Mastercard, and developer platforms such as Etsy and Services Now.
The pilot phase has begun. Cloudflare's Agents SDK was the first to integrate x402 and is privately testing the “pay per crawl” mode—AI crawlers are hungry and thirsty to access massive pages and settle fees on a daily basis.
Google's AP2 expanded x402 to support mixed payments between credit cards and stablecoins. The first B2B procurement pilots were launched on the Cloud Marketplace, involving Intuit and Salesforce.
Coinbase acts as Crypto's “bridge architect” here: x402 settles through Base, and AP2's Agreements (digital contracts) act like smart sentinels to ensure every step of the authorization and audit is seamless.
Why does AI need this “payment script”? Because AI agents are about to “learn to spend money on you.”
Currently, AI such as ChatGPT is still stuck in the era when humans place and pay for orders, but in the future, they will independently shop or subscribe to services, requiring a reliable payment framework.
AP2's Intent/ Cart Arrangements, such as fraud-proof “plot twists,” allow users to pre-sign budgets, generate shopping carts on agents, and the entire link is traceable.
x402 injects Crypto into the “climax” of instant settlement, using stablecoins to avoid bank delays. Gartner predicts that the AI payments market will soar to a trillion dollars by 2030, with Crypto accounting for 10%.
For Coinbase, the outcome of this story is that Base benefits from a low fee bonus.
Epilogue
Ten years ago, Coinbase started by collating a human transaction. It also raised funds in China, and went back and forth in the wind and rain.
Ten years later, it's more like underground networking, base tube settlement, low cost and high efficiency; USDC tube settlement, stable circulation; Echo tube distribution, upstream card slot; x402 connected to a “machine that costs money” at the remote end.
This Q3 earnings report is a milestone, with total revenue of $1.87 billion and net profit of $433 million, but behind the numbers is an empire blueprint — from dependency on fluctuations to stable rent collection; from exchanges to full-stack hubs.
The future of crypto is not 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 run all over the streets, Coinbase may already be the “US Federal Reserve for the digital economy.”
But don't forget, empire expansion always has frontiers — regulation, competition, black swans. Investors, hold on to your chips; this drama has just begun.
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