SBF Profile picture
12 Jan, 21 tweets, 6 min read
1) The other crypto IPO
3) Yesterday I looked into Bakkt's SPAC.

It did not look very good.

idk maybe it'll be worth $10b soon because fuck everything.

4) So how about the elephant in the room?

Coinbase is probably likely going to try to IPO this year.

What are its numbers?
5) Well, it's hard to find a lot of them.

But, roughly, it looks like they made about $1-2b of revenue last year, had moderately high expenses, and had something like ~50m customers, give or take.
6) The first thing that jumps out:

FTX traded about 2x what Coinbase did last year.

FTX did not make $1.5b of revenue.

What's going on there?
7) Well, their fees are higher than FTX--something like 4x as high!

But that still doesn't explain it.
8) So what's going on?

Well, have you ever tried to buy BTC using the Coinbase app?
9) Now, I want to tread lightly here--don't throw stones in glass houses!

But I tried to buy $8 of BTC. The price I got was... $40,422.

BTC is currently trading at $35,250.

That's a 14.5% fee.

14.5% is a lot.

(Maybe people should check out FTX!)
10) Well ok then.

So, mostly this is the "Coinbase fee". This isn't a % fee, it's a $ fee; in this case, $0.99. On a $8 trade.

So that's 12% right there.

The other 2.5%? Well, that's the spread.
11) Ok, so now things start to line up more.

If they traded $500m/day, and made $1.5b, that means that Coinbase made about 1% on their average trade.

Which, presumably, is some blended rate between ~8bps on their "Coinbase Pro" trades, and 1-10% on their app trades.
12) A lot of people complain about Coinbase downtime, or lack of features, or ratelimits, or withdrawals.

I wonder if Coinbase even cares.

Its 'pro' fees can't have been more than 10-20% of its revenue, really: 8bps*$500m*365 = $150m.
13) Coinbase doesn't make money when people use its API, or go to, or use their ratelimits.

Coinbase makes its money when your high school classmate decides to buy their first $25 of BTC on the app.
14) So:

a) Coinbase does, actually, make real money! This isn't Bakkt 2.0.

b) might be worth a lot. Maybe it shouldn't sell itself short.

But there's another interesting question here.

What happens when volumes skyrocket?
15) For FTX, the answer is pretty simple.

Just go to

Last week, FTX had its first ever $2m buy/burn.

Today, we're having a $3m buy/burn.

More volume has exactly the expected effect.
16) For Coinbase.... I'm actually pretty curious.

Today, Coinbase has $5b of volume. That's a lot!

It's also half of FTX.
17) If this kept up for a year, would Coinbase make $300m? Or $15b?

*Which* volume goes up?

Is it @AWice? Or is it his high school classmate buying their first BTC?

Is it @cmsholdings's bots, or Dan while he's bored in a meeting?

Are they paying 1-10bps or 1-10%?
18) I don't know! I wish I did.

All I can offer is the following.

Here are some graphs from FTX.
19) On FTX:

--Volume is up about 10x from a month ago
--Active userbase is up about 1.5x

So if FTX is any guide, most of the volume growth is the heavy duty traders; retail growth is smaller.

Which would imply that Coinbase's revenue is up more like 50% than 500%.
20) But maybe Coinbase isn't like FTX.

Maybe Coinbase really did have 10m users load their app to buy $100 each of BTC yesterday, each paying about $3 in fees.

That would be, at least from Coinbase's perspective, impressive.
21) It would also, in the author's humble opinion, be ripe for disruption.

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More from @SBF_Alameda

11 Jan
1) BAKKT is about to go public.

There are a number of "interesting" things in their deck.…
2) They're aiming for a $2b valuation. Where is that coming from?

Well, their 30m+ active users and $500m revenue, of course!*

(*2025 estimate)
3) wait, 2025 projections? Isn't that far away?

Sure, but when you invest, often you're investing in the future!

And, of course, you can paint a pretty compelling road towards 30m users based on their, uh...

Is that a 0?
Read 8 tweets
11 Jan
1) "The only secret is to begin"
3) I recently ready this interview with @moxie, the driving force behind @signalapp, and a quote jumped out at me:

‘The only secret is to begin.’ If you want to get good at something or do something, you just do it, and you figure it out along the way.…
Read 22 tweets
7 Jan
1) It took me a long time to become at peace with FTT. Image
3) Well, at the beginning, I was fucking stoked.

A few weeks before I was grinding away on arbs.

All of a sudden, people I hadn't met were willing to pay me $6m for 15% of the tokens that got 33% of the revenue...

...from a project that didn't even exist those few weeks ago!
Read 32 tweets
4 Jan
Ok, can we talk about @coingecko's drop-down list for a second?
2) So, ok, ETH is Trending. Sure! It's the second largest coin and had a good few days.

And, ok, GRT isn't shocking.
3) And, OCTO, I mean, yeah, I see it on Twitter sometimes, so.... that's something?

And uh.... ok yeah so what exactly is "Swirge"?

Or Tixl?
Read 5 tweets
28 Dec 20
1) FTX lists lots of products.

How do we avoid clutter?
3) To some extent there *is* clutter.

But also we do things to reduce it.

The biggest is margin.
Read 7 tweets
28 Dec 20
1) I talked with @VitalikButerin about L1s: ETH, SOL, others.

Here are some notes.

@VitalikButerin -- if I get your thoughts wrong here, definitely call me out on it!

And also feel free to give more color.
3) After our panel on effective altruism, Vitalik and I talked about a bunch of stuff; one topic was on different layer 1 blockchains.

My main question was:

What does he think makes an L1 better, or worse?
Read 25 tweets

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