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OpenSea has experienced seven years of ups and downs. The former NFT exchange king has still chosen to do a token offering.
Original Article Title: "OpenSea's Seven-year Roller Coaster Ride: The Former NFT Exchange 'King' Chooses to Issue Tokens"
Original Article Authors: Babywhale, Glendon, Techub News
Editor's Note: On February 18, OpenSea suspended its XP reward system due to user criticism of its new airdrop mechanism. Community members believe this mechanism is detrimental to builders, promotes wash trading, and prioritizes fee collection. OpenSea co-founder and CEO Devin Finzer announced the suspension of XP rewards for listing and bidding, focusing instead on the XP distribution mechanism launched on February 14. While the airdrop activity has been adjusted, the issuance of tokens by the former "king" still created a stir in the NFT market.
On the evening of February 13, OpenSea announced the launch of the OS2 beta version on X and revealed the upcoming platform token, SEA, hinting at an airdrop. Although the specific timeline and details have not been disclosed, this announcement undoubtedly resonated with many veteran players in the crypto community. Within just one hour, the tweet had garnered over a thousand comments and retweets, igniting a surge in community discussions.
OpenSea CEO Devin Finzer also emphasized in a tweet that "the upcoming OS2 is not just a new product, and SEA is not just a token, but an entirely rebuilt OpenSea from the ground up." There have been rumors suggesting that OpenSea's new version will adopt a UI centered around trading, inspired by Blur.
OpenSea is finally issuing tokens. If this had happened three years ago, it would have undoubtedly been a highly anticipated event in the crypto world. However, times have changed, and the crypto space is now dominated by MemeCoins, with NFTs long having been "out of fashion." What's even more lamentable is that even if we focus solely on the NFT sector, OpenSea's glory days are over. According to Dune data, OpenSea's January trading volume was only $195 million, a 96% drop from its peak of $5 billion at the beginning of 2022, with annual revenue shrinking to around $33.26 million.
According to nftpulse data, as of the time of writing, OpenSea's market share over the past 30 days has plummeted from 95% in December 2021 to 29%; furthermore, OpenSea's valuation has tumbled from a peak of $13.3 billion at the start of 2023 to around $1.5 billion, with it even reaching the point of being "up for sale."
So, how did OpenSea, once a dominant force in the NFT trading market, end up in this state?
Let's take a look back at OpenSea's brief history to see how it rose rapidly and then fell from grace in the competitive NFT market. Finally, let's discuss OpenSea's decision to launch its token at this time and the potential impact on the overall NFT market landscape.
Early Days: Surviving in the NFT Wilderness
Much questioned aspect is that among the startups in the Web3 space, OpenSea is undoubtedly a legendary company that started from scratch. Especially in the two years from 2021 to 2022, the company skyrocketed at an astonishing speed from obscurity to a valuation of $13.3 billion, positioning itself as a super "unicorn" and firmly holding the top spot in the NFT trading market. However, behind this brilliance lies a dramatic history of market ups and downs. Therefore, the rise and fall of OpenSea may also be seen as a microcosm of the NFT industry's evolution from chaotic growth to rational competition.
In September 2017, Devin Finzer and Alex Atallah secured seed funding from the renowned venture capital incubator Y Combinator with their innovative project "Wificoin," which aimed to use cryptocurrency for shared WiFi payments and was not related to the NFT space.
However, in November 2017, Dapper Labs officially launched CryptoKitties, a Ethereum-based crypto cat game, triggering a wave of hype. The frenzy of bidding at one point drove the NFT collectible price of CryptoKitties to 247 ETH, approximately $118,000 at the time.
That same year, CryptoKitties co-founder and CTO Dieter Shirley introduced the concept of NFTs (Non-Fungible Tokens) and promoted the release of the EIP-721 standard to define NFTs. (Techub News Note: EIP-721 was later discussed and improved, formally adopted in 2018 as the current ERC-721 protocol standard.)
It was the proposal of this standard that changed the entrepreneurial direction of Devin Finzer and his team. They decided to abandon the original "Wificoin" project and founded the NFT trading platform OpenSea in February 2018.
According to The Generalist, Devin Finzer expressed his view on this: "Seeing the potential of the NFT market, because there was a standard for digital projects, everything that came after CryptoKitties would adhere to this standard."
At that time, it was still the early stage of blockchain and cryptocurrency development, and the concept of NFT had not yet become widespread, making the entire NFT market almost a barren land.
Nevertheless, OpenSea was not the only NFT trading platform at that time. On the same day as its launch on Product Hunt, there was Rare Bits, which claimed to be a "zero-fee encrypted asset market similar to eBay," a more competitive rival than OpenSea. Interestingly, OpenSea also described itself as the "Ebay of crypto goods." (Techub News note, Ebay is an online auction and shopping website that allows people worldwide to buy and sell items online)
In May 2018, OpenSea raised $2 million from investors including 1confirmation, Founders Fund, Coinbase Ventures, and Blockchain Capital. However, Rare Bits had already secured $6 million in funding a month earlier from investors such as Spark, First Round, and Craft.
From a venture capital investment perspective, although OpenSea was at a disadvantage, Richard Chen, a partner at 1confirmation, favored OpenSea more. He believed that "Rare Bits did not understand NFTs as well as OpenSea did, OpenSea's team was more efficient and competitive, Devin and Alex did a great job in discovering new NFT projects and driving their launch on OpenSea. Moreover, when we invested in April 2018, OpenSea's transaction volume was already four times that of Rare Bits."
In addition, the sales strategies of the two companies were also different. OpenSea insisted on charging a 1% transaction fee (later gradually increased to 2.5%) to sustain operations through stable revenue. Rare Bits, on the other hand, adopted a "zero-fee" strategy in 2018 and promised to refund users the gas fees incurred in transactions, attempting to attract traffic by reducing user costs. This strategy initially garnered some attention, appearing more user-friendly, but was actually not conducive to the long-term development of the platform. The high operating costs also meant that Rare Bits would find it difficult to continue, especially as the "crypto winter of 2018" approached.
During this period, in order to expand its user base and increase platform trading volume, Rare Bits also attempted to expand its business from NFTs to a broader range of virtual goods trading, such as partnering with the anime platform Crunchyroll to release "digital stickers," and exploring the trading of non-NFT assets such as in-game items.
Unlike Rare Bits' diversification, OpenSea has remained focused, with its main focus always being on improving the NFT trading business.
However, on the long road to dawn, OpenSea's days were also challenging. The platform's early trading volume remained low, and early projects were limited to only a few NFTs such as CryptoKitties and CryptoPunks.
According to Titanium Media, in March 2020, the team size was only 5 people, with a monthly trading volume of around $1 million. Calculated based on a 2.5% commission rate at the time, OpenSea's monthly revenue was only $28,000. If it weren't for the "lifesaving funds" of $2.1 million injected by strategic investors like Animoca Brands at the end of 2019, this startup might have long disappeared into the industry's winter. As for Rare Bits, it showed signs of being on the brink as early as 2019 and eventually completely exited the market in 2020.
In hindsight, OpenSea's rise to become a leader in the NFT space can be attributed to its focused core business and streamlined operational decisions. Devin Finzer once said in an interview, "We are willing to develop in this field for the long term, regardless of the current growth trajectory. We want to establish a decentralized market for NFTs and hope it can last for 3-4 years."
As 2020 drew to a close, dawn was approaching. This year can be seen as a turning point in OpenSea's destiny. With the gradual recovery of the crypto market in the second half of the year, OpenSea, taking advantage of its status as a pioneer in the NFT market, began to reap the benefits, and its platform trading volume began to rapidly increase. According to Dune Analytics, in October 2020, OpenSea's monthly trading volume reached about $4.18 million, a 66% increase from September's $2.46 million.
In order to have a wider variety of NFT assets on the platform and attract more liquidity, OpenSea began to fully implement its "Open Market" product strategy.
In December 2020, OpenSea launched the new "Collection Manager" feature, allowing users to mint NFTs without fees (gas fees are borne by the buyer), and the official termed this feature "Lazy Minting," separating on-chain minting from metadata, allowing users to upload an item's metadata to OpenSea for free, and the item will only be minted as an on-chain ERC-1155 NFT when it is first sold.
This feature significantly reduces the barrier to entry for creators and, based on the feature of listing NFTs on OpenSea without review, every user can directly mint and release NFTs on OpenSea. Besides this advantage, OpenSea also covers the widest range of transaction types among similar platforms, including digital avatars, music, domain names, virtual worlds, trading cards, artworks, and various other NFT collections. Its strategy maximizes the supply of creators' works to attract more users in both the primary and secondary markets.
Objectively speaking, the pent-up potential of the NFT market has contributed to later success of OpenSea, but the rapid onset of the market's boom would absolutely not be possible without OpenSea's contribution.
In 2021, the Crypto market saw a comprehensive "bull market," and OpenSea, which had been dormant for two years, truly began to shine.
NFT Frenzy Explodes, OpenSea Tops the Throne with Monthly Transaction Volume in the Billions
According to Dune Analytics, in February 2021, OpenSea's data experienced explosive growth for the first time. On February 2nd, OpenSea's daily transaction volume exceeded $5 million, while the total transaction volume for January was just over $7.5 million. Ultimately, OpenSea's monthly transaction volume in February approached $95 million, more than a 10-fold increase compared to the previous month.
Also starting from the beginning of 2021, a large number of commemorative NFTs began to be issued on OpenSea. Bands, entertainment stars, sports celebrities, renowned artists, and many other well-known figures started releasing their NFTs. Many well-known brands also began releasing commemorative NFTs or launching customer loyalty activities using NFTs. It can be said that starting from CryptoKitties, the first wave of NFTs brought Web3 and traditional industries together and introduced many people who were originally unfamiliar with Crypto to a whole new "species" for the first time.
Budweiser's NFT Series
As the largest NFT trading platform, OpenSea finally rode the wave. Data shows that in March 2021, the transaction volume on OpenSea surpassed the $100 million mark for the first time, exceeding $300 million in July, and in August, that number grew more than tenfold month-on-month to reach $34.4 billion. It was also in March that OpenSea completed a $23 million financing round led by a16z, with many angel investors including Mark Cuban participating in this round of investment.
Although NFTs did experience rapid growth starting in early 2021, with the floor price of CryptoPunks NFTs rising from single-digit ETH at the beginning of the year to tens to twenties ETH by mid-year, the primary narrative in the market for the first half of 2021 still revolved around DeFi. At that time, the focus had not fully shifted to NFTs. The reasons for this can be attributed to the ongoing rise in DeFi's popularity and the fact that the NFT space had not yet seen any assets or concepts that could be hyped up.
As we entered the second half of the year, a series of PFP projects led by Bored Ape Yacht Club (BAYC) ignited the market, and NFTs were considered another phenomenal concept following DeFi. With the increasing trading activity in the NFT space, the monthly trading volume on OpenSea consistently remained at a high level of billions of dollars. In January 2022, this number even surpassed $5 billion. Nate Chastain, the product lead at OpenSea, tweeted at the end of August 2021 that the company had only 37 employees, yet in that month alone, OpenSea's fee revenue exceeded $80 million. The per capita contribution of over $2 million is extremely remarkable in any industry.
By the end of 2021, OpenSea had been in a relentless sprint most of the time. Apart from Nate Chastain, who was mentioned earlier, leaving due to an insider trading scandal, OpenSea hardly had any other negative news. Even though other NFT trading platforms received large funding, they could not shake OpenSea's position. In fact, almost all NFT trading platforms have more or less referenced OpenSea in their products.
While challengers are watching closely, is OpenSea "betraying" Web3 with plans for an IPO?
Amidst a flourishing era, a turning point is quietly approaching, and it all begins with the rumors of OpenSea's IPO...
In early December 2021, Bloomberg reported that Brian Roberts, the CFO of the US ride-hailing company Lyft, would join OpenSea as CFO, and Roberts indicated that he was planning an IPO for OpenSea. While this was initially seen as mundane news, it sparked some discussions within the Web3 industry. Many believed that OpenSea should issue a token to reward its users, as this is what Web3 projects should do.
Perhaps feeling some pressure, two days later, Brian Roberts personally came forward to clarify, stating that there is currently no IPO plan, and saying, "There is a big gap between what an IPO would ultimately look like and actively planning an IPO, we do not have plans to IPO, if we did, we would seek community involvement."
This somewhat ambiguous statement not only did not dispel the community's concerns, but instead further solidified everyone's belief that OpenSea will eventually go public, because he didn't even mention anything about issuing a token.
If OpenSea had decided to issue a token at that time, perhaps the NFT trading platform space would not have had such a subsequent exciting story, and it was precisely the choice of an IPO, a "selfish" decision, that tore open a crack in the once unbreakable wall.
At that time, OpenSea held over 90% of the NFT trading market share on Ethereum, and after its non-issuance attitude spread, some entrepreneurs saw an opportunity and quickly launched NFT trading platforms that issued tokens. LooksRare was one of them, although not the first project to launch a "vampire attack" on OpenSea, its impact was significant after OpenSea prepared for listing.
On January 10, 2022, LooksRare officially launched, with the team stating that users who have traded on OpenSea with a volume greater than or equal to 3 ETH can receive an airdrop by listing an NFT on LooksRare. In addition, users can stake the received LOOKS airdrop to share all platform transaction fees. Just 2 days after the launch of LooksRare, its daily trading volume exceeded that of OpenSea, and as of the 7-day trading volume data until January 19, 2022, LooksRare had more than triple the volume of OpenSea.
When the crack was torn open and the market discovered that OpenSea was not completely invincible, everyone began to show their strengths. Projects like X2Y2 launched in February 2022, Element focused on the BNB Chain, Zora focused on high-end art NFTs, and Magic Eden focused on the Solana NFT market, all continuously eroded OpenSea's existing market and potential market expansion. Perhaps it is a bit excessive to say that arrogance led to this, but at least the lack of precaution at the height of its power was indeed a major strategic mistake for OpenSea.
However, OpenSea's market influence remains unshakable. As we enter the second quarter of 2022, on one hand Yuga Labs is about to launch the APE token, while on the other hand, transactions of "blue-chip NFTs" such as Moonbirds, Doodles, etc., are still active. As the most liquid NFT trading marketplace, OpenSea still holds the pulse of the NFT market.
The key figure who changed the entire NFT landscape or should we say, the person responsible for the NFT market crash emerged at this time, fundamentally altering everyone's stereotypical impression of what the NFT market should be like.
Blur Emerges and Takes the Crown of the NFT Market
By the end of March 2022, Blur announced the completion of a $11 million funding round. At that time, many people might still wonder why a new NFT trading platform appeared. However, after Blur officially launched at the end of October, it took everyone by surprise.
A completely different UI that clearly stated there would be airdrops for listing, bidding, and buying, and the airdrop would be a "treasure chest" of an unknown amount of tokens. The UI designed purely for trading and the clear yet ambiguous airdrop feature, Blur excelled in product and gameplay design. Although many initially criticized Blur for its very user-unfriendly UI, once people got used to it, they found that this design was indeed much more user-friendly for trading than OpenSea. To make an analogy, if OpenSea is the e-commerce platform of NFTs, then Blur is the exchange of NFTs.
Prices are listed from low to high, displaying real-time trades and price distribution on the right. This trading-friendly UI design along with the airdrop expectations led to a significant influx of funds into Blur. Previously, many NFT trading platforms relied on tokens to attract traffic in the short term, but OpenSea's market share in terms of transaction volume was not challenged in monthly or quarterly data. However, with the emergence of Blur, OpenSea's share of transaction volume returned to above 50% just a week ago.
However, it was also because of this that large funds gained the ability to manipulate the market, engaging in frantic buying and selling. Coupled with the fact that the Crypto market had already entered a deep bear market, seeing big funds indiscriminately leveraging airdrop incentives led to the prices of numerous NFTs almost crashing through. Retail investors lost interest in NFTs, and as Bitcoin fell to around $20,000, the "last gatekeeper" of crypto assets also left the scene. With the collapse of the NFT market and the crowning of the new king Blur, OpenSea became cannon fodder.
In early 2022, OpenSea achieved a valuation of $13 billion and completed a $300 million Series C funding round. Two years later in early 2024, the OpenSea CEO has openly considered acquisition. During this "one-person Bitcoin bull market," many former blue-chip NFT floor prices have plummeted to an unbearable level, apart from the Pudgy Penguins with airdrop expectations. For OpenSea, without making changes, they may risk losing years of effort, which is certainly not what they want to see.
Therefore, OpenSea has now decided to launch the platform token SEA, partly as a self-rescue measure to deal with the continuous decline of their platform business, and partly because the former king may also have some unwillingness and ambition to return to the peak. So the question is, will OpenSea's token issuance potentially change the competitive landscape of the NFT market?
With recent surge in trading volume, can OpenSea reshape the competitive landscape of the NFT market?
Undoubtedly, with the issuance of the OpenSea token and the release of the OS2 beta version, the project most likely to be impacted is Blur. As a powerful rival that undermines OpenSea's position, Blur, despite showing signs of decline in line with the downturn in the Crypto market, still holds over 44% of the NFT market share in the past 30 days, firmly seated as the top player in the NFT market.
In addition to the unique product UI and gameplay design mentioned earlier, Blur initially attracted a large number of users with Bid Airdrop and a zero-fee model. In 2023, it conducted multiple airdrops to seize market share, as can be seen from the data:
On February 15, 2023, Blur carried out the first season airdrop of 3.6 billion BLUR tokens, which accounted for 12% of the initial total supply, and were immediately released. According to Glassnode's report, following the BLUR token airdrop, Blur's market share surged, with its NFT trading volume market share jumping from 48% to 78%, while OpenSea fell by 21%.
On February 23, 2023, Blur launched the second season airdrop of 3 billion BLUR tokens. This airdrop directly propelled Blur's trading volume well beyond that of OpenSea. DappRadar data shows that on February 22, 2023, BLUR trading volume reached around $108 million, while OpenSea was only $19.27 million.
To some extent, Blur's two large token airdrops played a crucial role in breaching OpenSea's "moat." As the saying goes, fight fire with fire, in the current NFT market downturn, if OpenSea's SEA token attracts users through airdrops or staking rewards, it is very likely to replicate this strategy. It may even emulate the "vampire attack" launched by past "OpenSea killers" such as LooksRare and x2y2 against Blur to compete for its core users.
In fact, since OpenSea confirmed the upcoming airdrop, it has sparked anticipation and discussion among many Twitter users, with many believing it will be one of the biggest airdrops of the year.
Furthermore, in terms of fees, the recent launch of OpenSea's OS2 beta has reduced the marketplace fee to 0.5% and the transaction fee to 0%. This directly mirrors Blur's zero-fee model. When SEA goes live, OS2, with its combination of "low fees + token incentives," is highly likely to establish a very flexible competitive strategy.
Objectively speaking, most users are fundamentally profit-driven. If the SEA token's reward mechanism is more attractive, coupled with the fact that some of Blur's existing users originally came from OpenSea, it may not be unlikely that these users will return to OpenSea. However, Blur's "moat" lies in its faster transaction speed than OpenSea and higher gas efficiency, giving it a technological advantage in the short term.
Affected by the token issuance news, the market has already reacted. According to nftpulse data, as of the time of writing, OpenSea's daily trading volume has reached approximately $29.8 million, with trading volume share soaring to 70.6% of the total daily volume.
For the entire NFT market, the launch of the SEA token by OpenSea is undoubtedly a good thing. In addition to stimulating a significant increase in NFT trading volume in the short term, OpenSea also mentioned in a tweet that OS2 now supports cross-chain transactions for 14 chains including Flow, ApeChain, and Soneium. Therefore, could the SEA token become a universal token for a multi-chain NFT ecosystem, thereby driving the development of NFT markets on Ethereum sidechains (e.g., Solana)? This is something we can look forward to.
However, from another perspective, the intense competition between OpenSea and Blur will once again squeeze the survival space of second-tier platforms like LooksRare and X2Y2. Blur is unlikely to sit idly by as its past rivals make a comeback. Blur may introduce more token use cases or further incentivize user loyalty with token rewards. Additionally, Magic Eden, also a rising star, should not be underestimated, with its dominant position on the Bitcoin and Solana chains. In the past year, the platform's total market trading volume has reached $3.2 billion, accounting for over 30%, second only to Blur's $3.8 billion (around 36%), while OpenSea's trading volume over the past year was only $1.2 billion, accounting for less than 12%.
In short, the author believes that OpenSea's SEA token is not only key to the platform's self-rescue, but may also become a driving force to help the NFT market recover from its slump. In the long run, the competition between OpenSea and Blur will also push the NFT space towards a more complex financialized and multi-chain direction. As for whether OpenSea can regain its dominant position, the future landscape will depend on the performance after the SEA token is launched. Let's wait and see!
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$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".
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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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Binance Sparks "Delist Concept": Can CEX Still Produce the Next ALPACA?
On April 24, Binance announced that it would delist four tokens, including Alpaca Finance ($ALPACA), on May 2, and cease trading of these pairs' perpetual futures contracts at 00:00 on May 1, 2025, Beijing time. Fast forward to the last day of perpetual futures trading delisting, ALPACA surged on the liquidation heat map. Over the past 24 hours, a total of $52.21 million evaporated in ALPACA's contract trading, exceeding the sum of the token's liquidation volume over the past two years.
Historically, when a token is listed on Binance, many traders would buy the news instantly ("Buy the News"). As the Binance listing effect gradually waned, traders found another path, which is to short sell the tokens set to be delisted from Binance ("Sell the News"). This strategy often has a very high success rate. However, as traders followed this path, they encountered the Alpaca on their short-selling journey.
Every thrilling market manipulation game requires careful preparation. Before Binance's official announcement, on April 10, $ALPACA was ranked 7th in the preliminary list of the second batch of "Vote for Delisting" on Binance, causing its price to plummet almost by half. However, in the five days leading up to Binance's official announcement, from April 19 to April 23, trading volume suddenly surged.
The story traces back to the start of Binance's second round of "Vote for Delisting," where ALPACA was included in the delisting candidates list, ranked 7th among 17 projects. After the completion of Binance's delisting vote count, $ALPACA was included in the projects to be delisted. The market did not react significantly, price fluctuations were not substantial, but trading volumes expanded abnormally, suggesting the entry of "manipulative funds" into the community.
On April 24, Binance officially announced the delisting of the $ALPACA spot trading pair on May 2 and the settlement of the futures contracts on April 30. Following the announcement, the spot price of $ALPACA dropped from $0.0329 to $0.029, with a market cap of only about $5 million. However, what followed were two price "rollercoaster" moments; within an hour, the price surged from $0.029 to $0.0857, an increase of about 195%, only to rapidly drop back to $0.04 within 3 hours. Shorts were caught off guard, and the open interest of contracts surged rapidly, initiating the "long and short grinder" mode.
On April 25, Alpaca Finance officially announced that the trading volume in the past 24 hours had exceeded 1 billion tokens. The liquidity provider had suggested a "minting for stability" to be returned to the treasury after a decrease in trading volume. However, as public opinion began to ferment, opposition filled the community. Alpaca Finance deleted the previous tweet and posted a new one at 9 p.m. on the same night, announcing the cancellation of the minting due to community opposition.
On April 26, Binance amended the contract funding rate rules, shortening the maximum rate cap settlement period to hourly and setting it at up to ±2%. Some high-leverage accounts continued to hold short positions against the high rate and were liquidated. Millions of dollars disappeared within a few hours, with $13 million in short positions vanishing on a token with a market cap of less than $30 million.
With the establishment of this short-selling trend, the price skyrocketed nearly 12 times from a low of $0.029 to $0.3477 within 3 days. The contract's open interest surged significantly, especially with a notable increase in short positions, resembling a microcosm of the Wall Street battle of GME's retail investors. However, this time, the retail investors' opponents could continue to mint additional chips.
From April 26 to April 29, these days were relatively calm, with the price fluctuating around $0.2 to $0.34. On April 29, Binance announced another increase in the rate cap to ±4%. Theoretically, such a high rate would severely impact short positions. If the rate remains at -4%, the bears will face a 96% "cost of ruin" after holding a short position for 24 hours. However, miraculously, the price plummeted from $0.27 to $0.067.
On April 30, with the contract delisting and liquidation scheduled in the final 24 hours, the price continued to experience intense fluctuations. ALPACA's attention peaked, with its highest price reaching $1.2 at one point. From a week before the delisting announcement to the eve of the contract delisting, ALPACA's price surged 40 times, creating an independent market for the token delisted by Binance. The total liquidation volume across the network also reached $50 million, with $42 million in "bearish fuel" beneath the price surge.
After the first surge of ALPACA, Heyi, the co-founder of Binance, replied to a netizen asking, "Can the teacher who buys the shell guarantee breakeven?" This has also triggered endless speculation among community members.
KOL Tunbtc believes that Heyi's reply to this matter was the starting point of ALPACA's surge. "The large holders of Alpaca's native token, by transferring spot chips, operating rights, and distribution rights, have pledged allegiance to Binance's deep-water core interest circle, allowing it to fully harvest market liquidity before delisting, slaughtering opposing positions." Through a triple path of fees, contract liquidations, and spot volatility, they converted user attention into profits.
He also called on Binance to thoroughly investigate this matter, clarify which market maker is manipulating the candlestick patterns, as ALPACA saw an 18x surge within 24 hours with users liquidated of tens of millions of dollars, while previously GPS's 500% surge was promptly halted, and expressed his sentiment: "All of this is thought-provoking."
Wenze, the founder of Beta Capital, believes that bypassing the regular listing process, buying shells, renaming, and restarting has crossed Binance's bottom line of maintaining listing credibility and brand compliance. Binance sometimes has a high tolerance for market fluctuations, and the OM issuance only adjusts the collateralization ratio, with many projects only allowed for leveraged trading. However, once the project, such as these "shell projects," is identified, it is easily labeled for observation, triggering a vote for delisting, ultimately leading to delisting rather than using mild measures.
Renowned KOL Rui, "YeruiZhang," likened the ALPACA incident to "crazy revenge on an ex" and shared a piece of insider information, claiming that the original whale behind ALPACA was a team that controlled BSC's MEV for a period of time and expressed dissatisfaction with Binance's current management for some reason. The comments section is rampant with speculation that it is BSC's whale 48CLUB, and 48CLUB's Ian even personally appeared to eat "his own melon."
With the recent buzz around VOXEL's surge and the wealth effect and discussion surrounding ALPACA, more and more "delisting concepts" have emerged. This concept does not necessarily refer to tokens that have already been delisted but rather shares some common characteristics of delisted tokens.
Famous KOL Chuanmo recently shared on Twitter his logic for choosing concept tokens and listed several tokens, all of which experienced varying degrees of price increase after his recommendation.
His "Concept Delisting" strategy involves selecting low-cap tokens from Bybit and Binance, arranging them by market cap from lowest to highest, with almost 100% price increase for the tokens with the highest holdings/circulating market cap. He buys three tokens daily following this order with a fixed amount, and based on the holdings/circulating supply ratio, he removes tokens that no longer meet the criteria daily and continues to buy the new top three tokens.
Many community members have tested this strategy, with some creating helpful tools. The dreamer Disney "discountifu" has created a dashboard, and Vivek10 early bird "vivekw_eth" has developed a monitoring and alert system that can be directly pushed to WeChat with a copyable link, although it is currently deployed locally and not yet entirely stable.
However, when using tools created for free by community members, please be cautious. While there are many enthusiastic contributors in the community, there are also many uncertain factors in this dark forest.
In an increasingly insular market, retail investors not only have to contend with whales and other retail investors but also must bear many unstable elements. The recent ALPACA incident serves as a warning to us. Whether it's a primary or secondary listing on a top-tier exchange or the "Concept Delisting" approach, we need to make rational asset allocations amidst FOMO to protect our principal and reach the other shore.
The mention of all tokens above does not constitute financial investment advice "NFA".
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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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