Coinbase is positioning itself as the leading public company in the Ethereum ecosystem, according to a comprehensive research report released by Wall Street broker Bernstein. The analysis highlights how the cryptocurrency exchange has strategically aligned itself with Ethereum’s growth through multiple revenue streams and operational integrations.
The report emphasizes Coinbase’s deepening integration with Ethereum through its Layer 2 blockchain Base, staking services, and token integrations. This strategic positioning comes as Ether (ETH) has surged 80% since June 5, driven by Circle’s public listing and increased recognition of Ethereum’s dominance in stablecoin minting operations.
Bernstein analysts, led by Gautam Chhugani, have assigned an “outperform” rating to Coinbase stock with a $510 price target, representing significant upside from the company’s trading price of around $323 at the time of the report’s publication.
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Base Layer 2 Chain Drives Revenue Growth
Coinbase operates Base, one of the largest Layer 2 chains built on Ethereum, which has emerged as a significant revenue driver for the company. The blockchain processes more than 9 million transactions daily, encompassing stablecoins, trading activities, financial applications, and consumer-facing services.
Base has become the dominant chain for token deployments, with increased trading activity resulting from Coinbase’s integration of Base tokens into its main exchange platform. While Base lacks a native token, transaction gas fees are settled in ether, positioning Coinbase to earn sequencer fees denominated in ETH.
The Layer 2 operation contributes to an annualized revenue run rate of $75 million for Coinbase, demonstrating the strategic value of the company’s blockchain infrastructure investments. This revenue stream provides direct exposure to Ethereum’s network growth and transaction volume increases.
The launch of the Base App has further enhanced Coinbase’s engagement with the Ethereum ecosystem, providing users with direct access to decentralized applications and services built on the Layer 2 network.
Coinbase’s Substantial ETH Holdings and Trading Revenue
Beyond operational exposure through Base, Coinbase maintains a substantial treasury position in Ethereum, holding approximately $590 million worth of ether tokens. This position consists of 136,782 ETH, providing direct price exposure to the cryptocurrency’s market movements.
The company’s ether holdings have benefited significantly from the token’s recent price appreciation, contributing to overall balance sheet strength. As ETH continues to rally, these treasury holdings provide additional value creation for shareholders.
Trading activity related to Ethereum has also contributed to Coinbase’s revenue growth, with July trading fees rising approximately 40% compared to Q2 averages. This increase reflects heightened trading activity in ether and related tokens as the altcoin market experiences renewed interest.
The following metrics highlight Coinbase’s Ethereum exposure:
- Base daily transactions: 9+ million
- Base annualized revenue: $75 million
- ETH treasury holdings: $590 million (136,782 ETH)
- July trading fee increase: 40% vs Q2 average
Analyst Outlook and Strategic Positioning
Bernstein’s analysis suggests that Coinbase is uniquely positioned to benefit from the broader altcoin rally, particularly given Ethereum’s central role in the cryptocurrency ecosystem. The firm views ether’s outperformance as signaling the beginning of a sustained altcoin rally.
The research report highlights how Circle’s public listing has catalyzed market recognition that most stablecoins are minted on the Ethereum network, supporting the blockchain’s fundamental value proposition. This realization has contributed to increased institutional and retail interest in ETH.
Coinbase’s strategic positioning extends beyond mere exposure to Ethereum’s price movements. The company has built operational infrastructure that generates revenue directly from Ethereum network activity, creating multiple revenue streams tied to the blockchain’s success.
The integration of decentralized exchange (DEX) trading capabilities directly into the Coinbase app represents another avenue for capturing value from Ethereum-based trading activity. This feature unlocks direct access to thousands of assets built on Ethereum and its Layer 2 networks.
Coinbase Business and Coinbase Payments are empowering enterprises with seamless crypto transactions and instant, borderless stablecoin payments, many of which utilize Ethereum infrastructure. The company’s Shopify integration brings millions of merchants onchain, facilitating global access and enhanced customer experiences.
Coinbase’s 2025 strategy focuses on growing core trading and payments businesses while accelerating the shift to onchain activities, positioning the company at the center of Ethereum’s ecosystem development.
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The market impact of Coinbase’s Ethereum-focused strategy could be substantial, as the company’s multiple exposure points create leveraged benefits from Ethereum ecosystem growth. With institutional adoption accelerating and regulatory clarity improving, Coinbase’s strategic positioning in the Ethereum ecosystem positions it to capture significant value from the ongoing digital asset transformation.
- Layer 2
- A secondary blockchain built on top of a main blockchain (like Ethereum) to improve transaction speed and reduce costs. Layer 2 solutions inherit the security of the underlying blockchain while processing transactions more efficiently.
- Sequencer fees
- Revenue generated by processing and ordering transactions on a Layer 2 blockchain. The sequencer is responsible for collecting transactions, ordering them, and submitting batches to the main blockchain.
- Gas fees
- Transaction fees paid to process operations on the Ethereum blockchain. These fees compensate network validators for the computational energy required to process and validate transactions.
- Stablecoin minting
- The process of creating new stablecoin tokens that maintain a stable value relative to a reference asset like the US dollar. Most major stablecoins are created and managed on the Ethereum blockchain.