A common saying in crypto is that bear markets are a great time to build the next batch of mainstream products and applications. Coinbase, the largest crypto exchange in the US, wants to ensure that this development takes place on its platform.
“We saw the DeFi summer in 2020, then we witnessed the NFT spring in 2021. Next cycle it will be Web 3.0’s turn,” said Surojit Chatterjee, Coinbase’s chief product officer, 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 invent everything 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 finances to build applications that can automatically interact with blockchains like Ethereum. “If you’re a developer, you first need to run a blockchain node so you can read/write the blockchain, query data, and monitor your application. This is very complex and not everyone’s cup of tea. Node enables developers to launch and manage nodes on a very simple and user-friendly platform.
Here’s what this all means: Imagine a developer wants to build an NFT trading platform. They need to create a website and interface for users. However, since this is a blockchain-based application, it also needs a way to interact with the platform so that all transactions are published over the network. These features can require completely different skills, and if the two platforms don’t sync properly, there could be tokens lost, bad user experience, or security vulnerabilities.
Node will start 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 activities that dominate the revenue base. Originally launched as a strike platform targeting institutions using cryptocurrency as collateral to earn more by backing the blockchain, Coinbase Cloud is now aiming to be the starting point for a slew 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 the self-hosted wallet and prime brokerage offerings — when the company revealed it was offering a massive $1 .1 billion had lost in the midst of the crypto slump which has seen the stock drop 72.94% so far.
A bright spot in the results, however, was growth in the exchange’s subscription and services products, which grew 44% year over year. Revenues from subscriptions and services even contributed 18% to total net sales, up from 4% a year earlier. The company does not split these figures into specific business units.
Chatterjee is optimistic that this trend will continue, but he also preaches patience. He declined to provide financial or adoption goals and numbers. “I think it’s too early to talk about that. First we want to build a great product that makes the customers happy and then numbers and statistics will follow.”
With regard to those potential customers, it is also important to note that Coinbase is not developing this product in a vacuum. In fact, it competes with two heavyweights in the industry. One is Alchemy, a $10.2 billion company that supports eight different blockchains such as Ethereum and Solana, 10 million end users and $100 billion in transaction volume. In addition, Ethereum-focused Infura, a hub of Ethereum.
To beat this competition, Chatterjee first puts its trust in Coinbase’s strong track record of security and ease of use, along with the intuitive nature of its interlocking products. “It’s 1+1 = 10,” he said, citing abilities like strike, custody and identity. “In addition, 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 might find troubling. “Blockchain compute data security models are decentralized and we are not changing that. We are creating easy access to blockchain,” said Chatterjee. He also claims that the company will not collect individualized user or transaction data, a major concern for users of mainstream tech companies like Facebook and Google.
This point is particularly relevant today after the US Treasury Department’s Office of Foreign Asset Controls endorsed Tornado Cash last month, an open-source platform that can be used to obscure and break traces of financial transactions. Armstrong has backed down on what he sees as a government oversight, going so far as to fund a lawsuit against the Treasury claiming that Coinbase would end its Ethereum strike operations if pressured by the US government into certain transactions. to block.
When asked whether Coinbase Cloud could allow the company to censor activities on applications supported by its platform, Chatterjee claims the company is unable to take such actions. “It’s fundamentally different [from Tornado Cash]. We are just an access layer.”
“I am enthusiastic about the product. It is a free service for developers to build Web 3.0 products in minutes.”