TLDR
- Coinbase said its prediction market business passed $200 million in annualized revenue in the third quarter.
- Daily prediction market traders grew more than 60% from the previous quarter.
- The product has posted 82% quarterly compound growth since launching less than a year ago.
- Coinbase said prediction market users are also adding to its spot crypto trading volume.
- CFO Alesia Haas said the business is less tied to crypto price swings.
Coinbase said its prediction market business has become one of the fastest-growing products in company history. The crypto exchange shared the update in its third-quarter earnings report.
The company released its results after U.S. markets closed. Coinbase is the largest regulated cryptocurrency exchange operating in the U.S.
Prediction Market Revenue Passes $200 Million
Coinbase said its prediction market business passed $200 million in annualized revenue during the September quarter. The number of daily traders grew more than 60% compared with the previous quarter.
The company said prediction markets have seen 82% quarterly compound growth since launch. Coinbase has offered the product for less than a year.
“Coinbase prediction markets are one of the fastest-growing products by revenue in Coinbase’s history, creating a new source of growth for the Everything Exchange,” the company said in a statement.
Coinbase offers event contracts through a partnership with a leading prediction market operator. These contracts let users trade on the yes or no outcome of real-world events.
Prediction Traders Moving Into Crypto
Coinbase said prediction market users are also adding to its crypto trading activity. “Users who trade predictions are also driving incremental spot volume,” the company said.
This ties into Coinbase’s Everything Exchange plan. The goal is to give customers one place for many types of financial services.
Dat Ngo, an accountant and financial expert at Vetted Prop Firms, commented on the approach. “Using prediction markets to bring traders in and then graduate them into options, futures and retirement accounts is smart from a business standpoint,” he said.
Coinbase Chief Financial Officer Alesia Haas said prediction markets “are adding another revenue stream and are less correlated to crypto volatility.”
Investors have long viewed Coinbase shares as closely linked to the mood of the crypto market. The company has been working to spread its revenue across more types of products.
Other brokerage firms that entered prediction markets have reported similar benefits. Coinbase is one of several companies outside the core prediction market industry that now offer event contracts.
Sports remain the largest source of trading volume on prediction market platforms. Outside of sports, cryptocurrency contracts are one of the fastest-growing categories.
Earlier industry comments suggested that many prediction market traders are new to crypto. When both products are offered on the same platform, those traders often start using digital currencies as well.
Coinbase’s latest figures point in the same direction. With annualized revenue above $200 million and daily traders up more than 60% in one quarter, prediction markets are now a growing part of the company’s business.
