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Interview with Silentberry Founder: On-Chain Literature as a New Medium of Human Civilization, RGB++ Protocol Building a New Creator Economy Ecosystem
In early 2024, the emergence of the RGB++ protocol once again ignited the market's enthusiasm for the Bitcoin ecosystem. The scalability and security brought by isomorphic linking and on-chain validation have made numerous investors excited about the potential "on-chain liquidity infrastructure" explosion in the Bitcoin ecosystem. As books, carriers of knowledge and culture, preserve the historical memory of human civilization, they are not only an important force driving the continuity and development of civilization but also a new form of on-chain assets. SilentBerry is the magical chemical reaction that combines the two.
As the first decentralized publishing platform built on the RGB++ protocol, SilentBerry has pioneered a new way of publishing by permanently recording book content on the Bitcoin blockchain. Through smart contracts and a tiered NFT issuance model, SilentBerry divides book ownership and revenue rights into four forms: Goldberry, Silverberry, Copperberry, and Blueberry. Users can purchase these digital assets using BTC, ETH, and CKB to obtain printing rights, e-book versions, and ongoing royalty income from books. The emergence of SilentBerry is not only a significant step forward for decentralized publishing but also a small step towards driving mass adoption of crypto.
At the same time, the new book "Rescuing Democracy" by renowned historian and economist Professor Qin Hui was globally launched on the SilentBerry platform on January 3, 2025. This innovative move not only marks a technological breakthrough in the publishing industry but also signifies a profound transformation in the dissemination of ideas and culture.
It is worth noting that on December 10th, SilentBerry received a strategic investment from the CKB Eco Fund, indicating that decentralized publishing has attracted the attention and support of capital.
Today, BlockBeats and SilentBerry's founder Eero Dong had a chat about how SilentBerry will change the way human history is recorded and what new increments it will bring to the entire Bitcoin ecosystem?
Why Choose the Decentralized Publishing Track?
BlockBeats: You have been working in the traditional cultural content dissemination industry. What experiences and reasons prompted you to start a Web3 venture? What was the realistic demand behind the emergence of SilentBerry?
Eero Dong: I have always been working in the cultural content dissemination field. I made an early attempt to securitize music intellectual property, which also attracted the attention of many musicians. I have also been involved in the dissemination and promotion of poetry. For example, I have been the overall planner of the Beijing Poetry Festival and this year marks the tenth anniversary. In this process, I have accumulated a lot of resources from creators. Through communication with them, I learned about the practical needs of many creators, inspiring me to pursue a creator economy on the Web3 track.
Although the book market is not large, we still believe that the publishing industry has always been an important medium for the dissemination of ideas. Books will never disappear because they can impart precise concepts and systematic knowledge. Now, the traditional book publishing track is facing the impact of AI and decentralization, standing at a critical juncture of transformation.
In the traditional publishing model, authors often face some content review and market-oriented restrictions, making it difficult for niche writers' books to be published or to earn revenue.
Another more important aspect is that the existing revenue distribution mechanism is highly unfavorable to authors and is very opaque. For example, the specific print run of a book and the royalty income allocated to the author are not easily transparent to the author, giving rise to our pursuit of decentralized publishing to address this structural issue.
Book publishing should not only be about cultural dissemination and expression but should also make the communication bridge between authors and readers more transparent and efficient. In this context, Silentberry emerged.
BlockBeats: From a technical standpoint, why did you choose RGB++? Why not choose the more developer-populated Ethereum or the more cost-effective Solana ecosystem?
Eero Dong: We chose the RGB++ protocol primarily based on its scalability and security advantages. The RGB++ protocol can directly record book content on the Bitcoin blockchain, ensuring not only the immutability of the content but also enabling flexible distribution of ownership and benefits, which is the foundation of our core business model.
Compared to other blockchains like Ethereum or Solana, Bitcoin places more emphasis on the robustness of its infrastructure and trust value. As the pioneer of blockchain technology, Bitcoin is not only the most primitive blockchain but is also widely recognized as the most trustworthy chain. Building on this foundation to further expand its functionality and provide a solid and tamper-proof storage platform for human knowledge is one of the key reasons we chose the Bitcoin ecosystem. Through distributed ledger technology, information can receive long-term protection while ensuring its trustworthiness and immutability on a global scale.
The technical flexibility of the RGB++ protocol also provides us with significant optimization space. It has brought significant improvements in storage fees, convenience, and reductions in fees similar to gas costs. We have made some adjustments to the RGB++ protocol to better align it with the actual needs of book content publishing and storage.
In Silentberry's vision, every book should be a monument to culture. Through a decentralized structure, we have eliminated the exploitation in the middle links of the traditional publishing model, allowing copyright revenues to be directly distributed to authors and readers through smart contracts. This not only protects the author's labor but also significantly enhances the transparency and efficiency of the publishing process.
In addition, the content itself will be directly engraved on the Bitcoin blockchain. On January 3, 2009, the first Bitcoin block was born. Therefore, we have also chosen to permanently engrave Professor Qin Hui's new work, "Rescuing Democracy," original manuscript on the Bitcoin blockchain for the first time on January 3, 2025, symbolizing an immutable record of knowledge. This is not only a way to respect the author's intellectual property rights but also a unique way of feedback to the buyers. Buyers will be able to receive an NFT of the book, further enjoying the true value and potential returns of the work.
BlockBeats: We see that Silentberry has adopted an innovative TTNFT issuance model, and many people may not be very familiar with this four-tier NFT gameplay. What specific rights and values do the four tiers of NFT provide to creators, readers, and early investors?
Eero Dong: Many creators do not have a large number of fans or a broad readership; they may only have a few hundred or less than a thousand loyal users. In the traditional publishing industry, such a scale is often difficult to be seen as "having market value" and cannot form an effective commercial chain. In this situation, the high threshold of the traditional publishing model and reliance on sales volume make it difficult for these creators to effectively connect with their loyal readers.
The lack of this scale effect has led many creators, even with solid creative ability and content value, to face the dilemma of not being able to generate income after completing their work. This not only undermines the enthusiasm of creators but also hinders the generation and dissemination of more high-quality content.
Silentberry's decentralized publishing platform aims to break through this barrier. Through technological means and innovative models, we hope to establish a direct and efficient channel for these smaller but valuable creators to connect with their readers, allowing every valuable work to find its rightful audience.
SilentBerry's Four-Tier NFT Issuance Model
Through the innovative four-tier issuance model, SilentBerry has established a more equitable revenue sharing system between supporters and creators, while reducing the publishing threshold and expanding reader participation opportunities. Authors can receive income at the early stage of book release, and as the release progresses, the earnings will continue to increase.
In the first stage (Goldenberry Stage), the revenue distribution for the book is 80% to the author and 20% to the platform. The pricing in this stage is self-set by the author based on their own reputation and the bestseller potential of the book, usually meeting the author's psychological expectations. Authors can earn income with only a small number of supporters, and once the Goldenberry Stage is sold out, it proceeds to the second stage.
The second stage (Silverberry Stage) is priced at 1/10 of the Goldberry Stage price, but the issuance quantity is 20 times that of the Goldberry quantity. After the Silverberry sells out, 60% of the proceeds will be distributed back to Goldberry holders to reward them for the high-risk support as early adopters. This model is similar to an IPO in the book industry: Goldberry holders are akin to early investors, receiving higher returns.
The issuance rules for the third stage (Copperberry Stage) and fourth stage (Blueberry Stage) follow suit. The Copperberry price is 1/10 of the Silverberry, with a quantity 20 times that of the Silverberry; the Blueberry, being the final tier, offers the book's NFT but does not include revenue-sharing rights. Blueberry holders can access the e-book download, physical book acquisition, and book club membership benefits, with all proceeds going to early supporters and the author.
It's worth noting that the author receives 80% of the proceeds in the first stage (Goldberry Stage), followed by a continuing 20% proceeds share in each subsequent stage, ensuring the long-term value of their creation. This tiered issuance model not only protects the author's rights but also, through fair revenue distribution, provides high returns to early supporters, attracts more readers, and builds a more decentralized book distribution ecosystem.
Professor Qin Hui's Web3 Debut, Silentberry's Startup Story
BlockBeats: Professor Qin Hui's role as the inaugural author for Silentberry may differ from public expectations. In Web3 startup projects, it's common to invite Crypto Native authors to release works. However, your collaboration with Professor Qin Hui seems particularly special; what's the story behind it?
Eero Dong: Professor Qin Hui's new book, "Saving Democracy," will officially launch on January 3, 2025. We chose this date to pay tribute to the birth of the first Bitcoin block on January 3, 2009. This is both a nod to Satoshi Nakamoto and because Bitcoin is not just a financial asset but also a content asset. It's crucial that Professor Qin Hui's first book is inscribed on the Bitcoin blockchain.
Readers familiar with Professor Qin Hui know he is a renowned historian who has long been in the academic spotlight. We selected Professor Qin Hui's work because his liberal ideas align closely with Bitcoin's decentralized nature, creating a profound resonance between philosophy and technology.
On January 3rd this year, Professor Qin Hui published a new work titled "Saving Democracy" on SilentBerry
In fact, before confirming the collaboration with Professor Qin Hui, we had many other well-known scholars and authors as alternative options. Initially, we had reservations when communicating with these scholars. However, after discussions, we realized that the Web3 space may have overlooked an important direction: the cultural and ideological potential embedded in decentralized publishing. While many had previously viewed Bitcoin solely as a financial asset, when we proposed that Bitcoin also has properties related to content dissemination and content assets, many scholars showed great interest and were willing to collaborate with us.
These scholars' core values align closely with SilentBerry's principles. They uphold the principles of publishing freedom and fair dissemination, which align with what SilentBerry aims to achieve through technology - a sense of freedom and fairness. Through this collaboration, we believe that decentralized publishing will open up a new path for the dissemination and innovation of ideas.
BlockBeats: The core of Web3 decentralization coincidentally aligns with the spirit of democracy. How do you view Professor Qin Hui's upcoming publication of "Saving Democracy" on SilentBerry? What significance does the publication of "Saving Democracy" have for SilentBerry?
Eero Dong: Professor Qin Hui has always been very attentive to the development of new technologies. However, as a large-scale, widely-adopted application in the Web3 space has yet to emerge, many people still have a vague understanding of Web3 and have missed further opportunities to engage. Therefore, when Professor Qin Hui learned that "Saving Democracy" could be published on the SilentBerry platform, he found that this model aligned well with his own beliefs.
The content of this book continues Professor Qin Hui's consistent style, fully reflecting his depth and breadth in analyzing issues from a global perspective, which I believe will be warmly welcomed by readers. In the book, Professor Qin Hui delves into various issues faced during the democratic development process and provides insightful perspectives.
The transparency and decentralization of the SilentBerry platform will bring innovative advantages to the publishing model, such as immutable content, transparent distribution mechanisms, and the widespread dissemination of books. This model not only emphasizes the archival value of knowledge but also continuously expands the reach of knowledge dissemination through a four-tier issuance model, allowing more people to access the book's content. This focus on knowledge dissemination is a common pursuit among many scholars.
In addition, a key feature of the Silentberry mode is fairness, where the author can directly see the revenue distribution, completely eliminating the complex intermediate steps in traditional publishing. This direct connection between creators and readers contrasts sharply with the traditional publishing model. In our view, many creators, including Professor Qin Hui, believe that this more transparent and efficient publishing form is likely to become the mainstream way of knowledge dissemination in the future.
BlockBeats: So apart from Professor Qin Hui, who we already know about, which other authors will be publishing works on Silentberry in the future? Will there be development of markets in different languages?
Eero Dong: In the foreseeable future, we plan to attract more authors to join the decentralized publishing ecosystem of Silentberry. Currently, we are in talks with several authors in Chinese, English, Japanese, Korean, and other languages, covering a diverse range of topics and perspectives. At the same time, our platform already has a significant backlog of manuscripts, and based on the experience and features of this initial launch, we will gradually introduce works by more outstanding authors.
At the current stage, the platform is still in its early operational phase, so we are using an invitation system to release works, focusing on curated content. However, as the platform stabilizes over time, we plan to open up work publishing permissions, fully realizing decentralization, allowing anyone to publish their works on the platform.
In the work publishing process, we provide a set of automated tools that will greatly facilitate authors' operations. The tools can automatically generate and design covers, upload content, and set printing and formatting. We offer over 1,000 printing formats to choose from, and have partnered with a global printing network to support on-demand printing, starting from a single copy and distributing globally. This efficient publishing model not only enhances the convenience of publishing but also further lowers barriers, providing more authors with opportunities for creation and dissemination.
In the future, our primary market focus will be on the European and American regions, especially in Europe. The linguistic and cultural diversity of Europe is one of our core concerns, as it aligns closely with the inclusivity of knowledge dissemination advocated by our platform. In this context, we plan to incorporate AI tools in the platform's second-phase product to better support multilingual publishing.
Through these AI tools, we hope to assist excellent authors who use less common languages in quickly translating their works into mainstream languages such as English, French, Spanish, etc., for broader dissemination of their ideas and content. This will not only enhance the international impact of outstanding works but also allow more readers to access unique perspectives from different cultural backgrounds.
Overall, our focus is more on building a globalized publishing market, leveraging technology to break down language and cultural barriers, and providing a more open and inclusive knowledge-sharing platform for global authors and readers.
Behind CKB Eco Investment, How Will Silentberry Plan for the Future?
BlockBeats: Recently, we saw Silentberry receive a strategic investment from the CKB Eco Fund. How will Silentberry plan to use this funding? What impact will this investment have on Silentberry's ecosystem development and technological improvement?
Eero Dong: First and foremost, we are very grateful for the investment from the CKB Eco Fund. This not only marks the first time that the decentralized publishing sector has received attention and recognition from capital, but also further demonstrates the potential and feasibility of the sector's future development.
Regarding the planning and use of this funding, we will mainly focus on the following three areas:
1. Optimize Technical Structure: Further enhance the platform's technical infrastructure to ensure system stability and scalability.
2. Improve User Experience: Continuously enhance user interaction and operation processes to provide authors and readers with a more convenient and user-friendly experience.
3. Expand Global Content Distribution Ecosystem: Promote the dissemination of content on a global scale, especially content value around the Bitcoin ecosystem, and explore more innovative application scenarios.
CKB Eco Fund Invests Strategically in SilentBerry
Our team has always paid close attention to the CKB project because their focus and solid performance in the Web3 field are impressive. Especially against the backdrop of the current hype in the Web3 community, CKB has always focused on infrastructure construction and steadily rolled out a series of excellent products and protocols, such as the RGB++ protocol, wallets, and Lightning Network-related applications, among others. Our development team also sees great potential for application explosion in the Bitcoin ecosystem, and CKB is undoubtedly in a leading position in this field.
This collaboration with CKB can be described as a perfect match. Our project focuses on driving content assetization, aligning highly with CKB's concept of the "Common Knowledge Base." As our strategic investor, CKB has not only provided us with financial support but has also greatly assisted us in various aspects such as technical guidance, incubation, marketing, and product positioning. This is particularly important for a startup team like ours.
We are very excited to work with CKB to further the development of decentralized publishing, injecting new vitality into the Bitcoin ecosystem and global knowledge dissemination.
BlockBeats: Besides Silentberry's own efforts in marketing, what are your future market expectations for the industry as a whole? Specifically, in the next few years, what scale or achievements do you think Silentberry should reach?
Eero Dong: I believe that in the next few years, Silentberry will gradually realize the diversified development of content assets. We will not only focus on book publishing but also plan to enter other fields such as music assets and gaming assets. Through our unique model, especially the four-level NFT approach, we will achieve direct connection and dissemination of these assets with users.
On a technological level, in the next one to two years, we will introduce a DAO mechanism to allow more people to directly participate in the content governance process, achieving a more open and decentralized content ecosystem. At the same time, we will also launch more AI-based innovative products. For example, in future iterations, we plan to introduce a feature for interacting with books. At that time, books will not only be static reading materials but will evolve into interactive, dynamic content forms, providing users with a completely new reading experience.
BlockBeats: For a decentralized platform, if there is no intervention in content publishing, there may be low-quality or even illegal content. What measures will Silentberry take to prevent the tragedy of the commons?
Eero Dong: In terms of content governance and compliance, we have always placed high emphasis on the protection of minors and compliance with the laws and regulations of the relevant countries and regions. To this end, we will introduce a DAO (Decentralized Autonomous Organization) mechanism to allow more users to participate in the platform's content governance, forming a more open, transparent, and efficient governance model.
BlockBeats: Apart from the publishing or content publishing sector, what impact do you think blockchain technology will have on the entire cultural industry or content publishing sector?
Eero Dong: I believe the impact of blockchain technology on the cultural industry and content publishing sector is undeniable. During our conversation, many companies may have already been developing new products or iterating on existing products, and the pace of this change may be faster than we expect.
Taking our Silentberry publishing track as an example, as early as mid-November last year, Microsoft established 8080 Publishing House, aiming to reshape traditional publishing using AI technology. They clearly could not tolerate the highly centralized and lengthy cycle issues in traditional publishing. Additionally, ChatGPT has deep cooperation with a German publishing giant, attempting to reshape the publishing industry's landscape through new technology.
At the core of blockchain technology lies its ability to decentralize, and smart contracts enable a more efficient profit-sharing mechanism. This technology will break through existing geographical and language barriers, especially with the combination of AI and Web3, greatly enhancing the efficiency of knowledge dissemination. My personal prediction is that in the first half of 2025, we may see a series of explosive growth in new tools and new models, bringing profound changes to the cultural and educational fields.
BlockBeats: Many thanks to Teacher Eero Dong for sharing insights on the decentralized publishing track.
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
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Key Market Intelligence on May 14th, how much did you miss out on?
1.Binance Alpha Launches HIPPO, BLUE, and Other Tokens
2.Believe Ecosystem Tokens See General Rise, LAUNCHCOIN Surges Over 250% in 24 Hours
3.Tiger Securities Introduces Cryptocurrency Deposit and Withdrawal Service, Supports Mainstream Cryptocurrencies such as BTC and ETH
4.Current Bitcoin Rally Possibly Driven by Institutions, Retail Traders Yet to Join
5.Binance Wallet's New TGE Privasea AI Participation Requires a 198 Point Threshold, with a Point Consumption of 15
Source: Overheard on CT (tg: @overheardonct), Kaito
PUMP: Today's discussions about PUMP focus on its new creator revenue-sharing model: the platform will allocate 50% of PumpSwap revenue to token creators, sparking varied reactions from users. Some criticize the move as insufficient or even misleading, while others view it as a positive step the platform is taking to reward creators. Meanwhile, PUMP faces market pressure from emerging competitors like LetsBONKfun and Raydium, which are rapidly gaining market share. Users also express concerns about PUMP's sustainability and potential regulatory risks in the U.S., with discussions extending to the platform's impact on the entire memecoin ecosystem.
COINBASE: Today, Coinbase became the first crypto company to join the S&P 500 Index, replacing Discover Financial Services, sparking widespread industry attention. The entire crypto community views this milestone as a significant development, signaling that crypto assets are further integrating into the mainstream financial system. The news has sparked lively discussions on Twitter, with many users pointing out that this may attract more institutional investors to enter the Bitcoin and other cryptocurrency markets.
XRP: XRP became the focal point of today's crypto discussion, with its significant market movements and strategic advances drawing attention. XRP has surpassed USDT to become the third-largest cryptocurrency by market capitalization, sparking market excitement and discussions about its future potential. The surge in market capitalization and price is believed to be related to increasing institutional interest, deepening strategic partnerships, and its role in the crypto ecosystem. Additionally, XRP's integration into multiple financial systems and its potential as a macro asset class are also seen as key factors driving the current market sentiment.
DYDX: Today's discussions about DYDX mainly focused on the dYdX Yapper Leaderboard launched by KaitoAI. The leaderboard aims to identify the most active community participants, with a total of $150,000 in rewards to be distributed over the first three seasons. This initiative has sparked broad community participation, with many users discussing the potential rewards and the incentive effect on the DYDX ecosystem. Meanwhile, progress on the ethDYDX to dYdX native chain migration and historical airdrop events have also been topics of discussion.
1. "What Is 'ICM'? Holding Up the $4 Billion Market Cap Solana's New Narrative"
Overnight, the hottest narrative in the crypto space has become "Internet Capital Markets," with a host of crypto projects and founders, led by the Solana ecosystem's new Launchpad platform Believe, releasing this phrase. Together with "Believe in something," it has become the new slogan heralding the onset of a bull market. What exactly is the so-called "Internet Capital Market," will it become a short-lived hype phrase like the Base ecosystem's previous Content Coin, and what related targets are available for selection?2.《LaunchCoin Surges 20x in One Day, How Did Believe Create a $200M Market Cap Shiba Inu After Going to Zero?｜100x Retrospective》
LAUNCHCOIN broke through a $200 million market cap today, with the long-lost liquidity and such a high market cap "Memecoin" almost bringing half of the on-chain crypto community CT into the fray. The community is crazily discussing this token, with half of it being FOMO and the other half being FUD. This token, originally issued by Believe founder Ben Pasternak under his personal identity, transformed into a new platform token after a renaming. From once going to zero to a $200 million market cap, what happened in between?May 14 On-chain Fund Flow
Within 24 hours, GOONC's market cap soared to 70 million, could GOONC be the next billion-dollar dog on the Believe platform?
Bitcoin has broken $100,000, Ethereum has surpassed 2500, and is Solana's hot streak about to make a comeback?
The current market is in a state of macro euphoria, with GOONC riding the wave today, skyrocketing 10x in just a few hours, reaching a market cap of tens of millions of dollars, trading volume soaring past 50 million, and rumors swirling that the developer may be from OpenAI (unconfirmed but intriguing enough).
A ludicrous and absurd Solana meme that some actually buy into.
GOONC is a meme coin that has sprouted from the "gooning" subculture, offering no technological innovation or practical use, its sole function being speculation.
It takes inspiration from an NSFW term "gooning," which refers to a person being deeply immersed in certain content (you know what), eventually entering a nearly religious-like trance.
In Reddit (such as r/GOONED, r/GoonCaves) and some counterculture media outlets (such as MEL Magazine in 2020), "gooning" has gradually transitioned from an adult label to a meme-addicted, digital content and virtual self-indulgence synonym, arguably the epitome of Degen spirit.
GOONC is playing around with this concept, packaging the addictive nature, uselessness, and irony of gooning into a tradable financial product. The project team has made it clear: "We do not solve blockchain problems, we only trade absurdity." Blunt but oddly genuine.
GOONC launched on May 13, 2025, using the meme coin launch platform Believe App's LaunchCoin module on Solana. This tool is highly Degen: zero technical barriers, a few clicks to create a coin, perfect for projects like GOONC that can come up with ideas out of the blue.
The mastermind behind GOONC is also quite something and is the most talked-about, with KOL @basedalexandoor on X platform (alias "Pata van Goon") personally involved. His profile even caught the attention of Marc Andreessen, co-founder of a16z, making onlookers unable to resist speculating if GOONC has a hint of OpenAI lineage.
While this 'OpenAI Endorsement' is currently just community speculation, it is definitely a good card to play to fuel hype. Saying "we are pure speculation" on one hand, while tagging a few "AI + a16z" on the other.
GOONC took off as soon as it launched. After its launch on May 13, 2025, its market capitalization skyrocketed to $22 million within 4 hours, with a trading volume exceeding $25.6 million in 24 hours. According to platform data, the first day of trading saw an astonishing +41,100% surge, soaring from $0.0000001 to $0.02, becoming a "missed-the-boat" situation.
GOONC quickly formed an active trading community post-launch, with a lot of discussion and trading signals appearing on X platform (such as the 292x return signal provided by DeBot). Liquidity pools on exchanges like Raydium and Meteora grew rapidly, supporting high trading volumes and price increases.
The real climax occurred between May 13 and May 14, with the market cap rising to $5.5 million in the morning and directly surpassing $55 million in the afternoon. By the 14th, it briefly approached a $70 million market cap, with the trading volume soaring to $59 million. Some community members even posted screenshots claiming an increase of +85,000%, creating a new myth out of the ruins.
As of 1:30 pm on May 14, the price stabilized around $0.039, with a total market cap and FDV both around $39.6 million, and a 24-hour trading volume of $5.43 million. Active platforms include XT.COM, LBank, Meteora, and others.
Although there was a slight pullback from the peak ($0.07), the coin's popularity remains strong. For a coin that relies purely on "irony + community + X post" to thrive, this performance is already at a stellar level.
Currently, the background of the token's development team is not transparent, increasing the potential risk of a rug pull. Rugcheck.xyz warns that the creator of the GOONC contract may have permission to modify the contract (e.g., change fees or mint additional tokens), posing certain security risks.
Community members speculate that the meteoric rise of GOONC may be the "last hurrah".
After Surging 40%, Has Ethereum Price Peaked Upon Exiting the Craze?
Whether you are an insider or an outsider, these days you must be familiar with the news about Ethereum. The reason is simple, causing Ethereum enthusiasts to sigh with emotion and almost throwing off-guard those who defend Ethereum, Ethereum, with a "3-day surge of 40%," climbed to the top of the Douyin Hot List.
As we all know, Ethereum launched the Pectra upgrade on May 7th. This most significant network upgrade since early 2024 integrates the Prague execution layer hard fork and the Electra consensus layer upgrade, significantly improving Ethereum's performance through 11 improvement proposals. The account abstraction feature (EIP-7702) allows users to flexibly manage wallets through social media accounts or multi-signature schemes, reducing the user threshold, attracting more users and developers. The staking mechanism optimization increases the validator ETH cap from 32ETH to 2048ETH and introduces a flexible withdrawal method, making it easier for institutions and individuals to participate in network security, enhancing the market's confidence in Ethereum's long-term value.
At the same time, Pectra optimized the interaction efficiency of Layer 2 networks such as Arbitrum and Optimism, making transactions faster and cheaper, leading to a surge in on-chain activity. As a crucial step for Ethereum's transition from "2G" to "5G," the Pectra upgrade not only enhances network vitality but also "recharges confidence" in the market, directly driving the price increase.
Related Reading: "Ethereum Skyrockets 22% in One Day, E Enthusiasts Rejoice"
It's not just Ethereum itself, as Wall Street also brought important bullish news.
The world's largest asset management company, BlackRock, proposed to the SEC allowing Ethereum ETFs for staking. This proposal is expected to elevate Ethereum ETFs from a mere investment tool to a bond-like "interest-bearing asset," bringing investors both capital appreciation and passive income, igniting market optimism about Ethereum's future potential.
Specifically, BlackRock has proposed to amend its S-1 filing to allow investors to create and redeem ETF shares directly with Ethereum instead of the U.S. dollar (i.e., in-kind redemption). This move, combined with its $2.9 billion BUIDL Fund launched in March 2024, aims to deepen the integration of traditional finance with blockchain. The BUIDL Fund is a tokenized fund operating on the Ethereum network, investing in traditional assets such as U.S. Treasury bonds. This setup is highly attractive to institutional investors, as they can not only benefit from Ethereum's price appreciation but also earn stable cash flow through staking.
Robert Mitchnick, BlackRock's Head of Digital Assets, stated in a CNBC interview in March 2025 that the addition of staking functionality will significantly enhance the appeal of the Ethereum ETF. He admitted that when the Ethereum spot ETF was launched in July 2024 without staking functionality, the market demand was lackluster, and staking could be the key to reversing this trend.
Meanwhile, the SEC's shifting stance on cryptocurrency regulation has also fueled this upward trend. During the tenure of the previous SEC chairman, the regulatory approach was tough, and staking was strictly viewed through the Howey test as a potential unregistered security. Therefore, when approving the Ethereum spot ETF in May 2024, staking functionality was explicitly prohibited.
However, with Trump back in the White House and Paul Atkins taking over the SEC, there has been a noticeable relaxation in crypto regulation. Apart from BlackRock, ETF issuers such as Invesco Galaxy, VanEck, WisdomTree, and 21Shares have also submitted applications for similar staking and in-kind redemption.
Related reading: "New Chairman Takes Office, SEC Transforms into 'Crypto Daddy' Within 48 Hours"
If staking ETFs are approved, the benefits are likely to go beyond price appreciation. The introduction of staking functionality could redefine the role of crypto assets, making them more similar to traditional financial products that provide returns and value appreciation, thereby driving Ethereum closer to mainstream finance.
Currently, the SEC still needs to address several decisions related to crypto ETFs, including whether to approve ETFs for Solana, XRP, Litecoin, and even Dogecoin. With the calls for an "altcoin season" growing louder, Ethereum's strong performance may just be the beginning of a larger crypto market frenzy.
In addition, the Trump family-related DeFi project WLFI is also bullish on this wave of rise, with frequent on-chain activities. According to on-chain data analyst @ai_9684xtpa's monitoring, a WLFI-related address is currently borrowing coins to go long on ETH, borrowing 4 million U from Aave to buy 1590 ETH at an average price of $2515 per ETH.
For this epic surge of Ethereum after half a year of silence, the community has indeed gained more confidence and hope, which has also led to a revival of the entire altcoin market. However, amidst the joy, there are also voices of pessimism. Below is a summary conducted by BlockBeats based on community discussions.
The optimists point out that the current market structure is similar to the eve of the bull markets in 2016 and 2020, predicting a life-changing surge in the next 3-6 months, where some altcoins may even achieve astonishing single-day gains of up to 40%.
@liuwei16602825 stated that this surge signifies the return of the bull market as a sure thing. There is no need to worry about a pullback. The driving force behind the surge uses a high-cost isolated operation, fearing a drop more than any retail investor and will definitely do everything to support the price.
Related Reading: "Ethereum Leads the Surge Triggering the 'Altcoin Season' Speculation, How Do Traders View the Future Market?"
The bears mainly believe that this surge is different from the bull market of 2021, as the current market lacks the confidence of large-scale retail investors entering and holding positions for the long term, with funds rotating too quickly.
@market_beggar observed that a Bitfinex E/B whale has started to close positions and believes that if this whale maintains its high-speed position-closing operation for the next few days, it can be inferred that the whale no longer sees the upside potential of ETH, preparing to take profits and exit. The closing time will be a key focus going forward.
@FLS_OTC stated that there are still many uncertainties at the macro level, and the liquidity cannot support a major bull market. At this stage, it is a "last hurrah," not a complete reversal, and will continue to remain in a short position.
@off_thetarget believes that after ETH transitioned from POW to POS, it lost the "gold standard" of mining machine power cost support. The staking economic model led to a breakdown in value anchoring. Additionally, the L2 ecosystem (such as Starknet, zkSync, etc.) suffered from liquidity fragmentation, failing to establish an effective capital inflow mechanism, causing the collapse of the split disc pattern. Furthermore, the ETH community's excessive pursuit of technical narratives divorced from real-world needs resulted in a weak ecosystem growth. Therefore, he believes that ETH's intrinsic value system has crumbled, and the price is bound to plummet to the 800-1200 range, with a decisive short position at 1800.
@Airdrop_Guard, based on the core logic of the "High Probability Trading Strategy," where three sets of underlying logic different trading systems (such as volume depletion, price supply-demand, long/short position funding rate, etc.) simultaneously issue a short signal at the same point (2580), creating a high-probability trading opportunity. He emphasizes that these systems must be based on different algorithms and logics (rather than mere technical indicator overlays). The current ETH trend aligns with the short conditions in multiple independent dimensions of his trading system, hence the decision to short.
Overall, Bitcoin still maintains over 54% market dominance, and institutional funds' continued preference for it may limit the altcoin's upward potential. The market's future direction will depend on multiple factors, such as Bitcoin's price trend, global macroeconomic conditions, and whether funds can effectively rotate from Bitcoin to the altcoin sector.
Although Ethereum's recent leadership in the market has brought about optimistic sentiment, investors still need to remain rational as different sectors of altcoins are likely to show divergence in trends. Whether this round of Ethereum's rise will usher in a true altcoin frenzy may require more time and conducive conditions.
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$COIN Joins S&P 500, but Coinbase Isn't Celebrating
On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.
On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.
Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.
In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.
Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.
Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.
According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.
This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.
Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.
In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.
According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.
However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.
The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.
On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.
With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.
In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.
Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.
Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.
In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.
Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.
Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.
Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.
In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.
Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.
Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.
Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.
Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.
Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.
With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.
However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.
In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.
The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.
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