Coinbase Not ‘Throwing in the Towel’ on NFT Marketplace Despite Weak Volume

Cryptocurrency exchange Coinbase signaled yesterday that it’s not backing away from its NFT venture anytime soon. That’s despite a drastic drop in volume over time and fresh scrutiny from shareholders.

After the company reported higher-than-expected sales and a loss of $577 million for its final fiscal quarter of last year, Coinbase fielded a series of questions about the business’s health on an earnings call with investors and analysts.

One question raised by shareholders focussed on the exchange’s NFT venture, a platform that was launched last spring. It asked Coinbase to disclose how much money the company’s lost related to its NFT marketplace and how it plans “to reduce the burn” that comes with operating the business.

The shareholder also wondered what lies ahead for the marketplace and how Coinbase could increase its market share. Over the past week, Coinbase NFT has seen only 41 sales and less than 3 Ethereum in volume worth roughly $4,900, according to a Dune Analytics dashboard.

That makes it a virtual ghost town compared to other NFT marketplaces like OpenSea and Blur, which have seen around 303,000 and 53,000 sales within the past week, respectively. 

Without disclosing any project-specific losses, Coinbase President and COO Emilie Choi said the company continues to view Coinbase NFT as a worthwhile project. “We continue to see medium and long-term opportunities here,” she said.

But Choi did appear to say that Coinbase is now devoting fewer resources to the project now than it has in the past. “We've got a very lean team on it now, but we're not throwing in the towel by any means,” she said.

Last month, Coinbase said it was letting go of 950 employees, the exchange’s second round of layoffs in the past year after trimming its headcount by 1,100 employees last June. The company declined to comment about the scale of layoffs pertaining to Coinbase NFT.

“The Coinbase NFT team has realigned its resources to focus on the highest impact areas for our users,” a Coinbase spokesperson told Decrypt. “We're bringing increased focus and efficiency to a smaller set of high-impact focus areas within Coinbase NFT.”

NFTs are unique digital tokens that are used to prove the ownership of an item, often digital art. And the ecosystem surrounding NFT trading has undergone a recent shakeup, as Blur and OpenSea battle it out for the top spot, prompting OpenSea to slash creator royalties recently as Blur’s volume surged ahead.

Meanwhile, Coinbase NFT has been paring back some elements of its business. The venture said it was “pausing” future NFT drops with creators to “focus on other features and tools that creators have asked for,” according to a recent Tweet.

But as Blur and OpenSea put less of an emphasis on creator royalties in the overall NFT market, Coinbase could stand to benefit from the shift. The team behind one project called Deathbats Club recently said Coinbase NFT is now its preferred platform and that trading the project’s tokens on OpenSea would be blocked.

Choi said Coinbase NFT was created as part of the exchange’s strategy for allocating cash, which sees 10% of its resources devoted to venture opportunities. She added that Coinbase is taking “a more rigorous approach to investment in new and unproven products,” yet will do so “in a very lean, efficient way and get back to just smaller team.”

Even though the project is scaling back in some ways, a spokesperson for Coinbase told Decrypt the NFT marketplace has a long road ahead. “We are still in the very early days of building,” they said. “We see a huge long-term opportunity to help customers discover and create NFTs, engage in social connections, and find communities.”