The Coinbase IPO: A Change In Listing Policy?

Coinbase showing preference to high volume meme tokens like Doge and Shib
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Coinbase was once the holy grail of exchanges for cryptocurrency. Whenever a coin or token was listed there, it was inevitable that the price was going to skyrocket. 

Today recent additions to the Coinbase Exchange have had less than impressive gains. This shift could easily be associated with what some are calling a bear market. However, others contend that the quality of projects and listings recently added to Coinbase has been less than stellar. 

Some have hinted that since the IPO, Coinbase has changed its approach to new listings. In other words, rather than listing projects with solid use cases and technology, Coinbase has shifted gears and is now seeking to solely list for volume and those inevitable fees. Recent additions such as $DOGE (Dogecoin) and soon to come listing of $SHIB (Shiba Inu) have brought the meme economy to Coinbase.

Let’s take a trip back in time for a moment. Coinbase launched a Digital Asset Framework in November of 2017. The goal here was to outline how various crypto projects would be evaluated for onboarding on the Coinbase or GDAX (currently known as Coinbase Pro) exchanges. 

This new framework provided a 45+ point evaluative process to get listed.  In September 2018, the only available assets were Bitcoin, Ethereum, Ethereum Classic, and Litecoin.  Since then the exchange has increased its offerings to 66 assets and counting.

Fast forward to April 14th, 2021 when Coinbase goes public on Nasdaq. The IPO of Coinbase drew quite the excitement from both traditional investors as well as those in cryptocurrencies. The initial share price was $429.54 on launch. However, that was short-lived and has since begun to level out around the $247.50 range. With all of this, Coinbase is discovering that its status as a publicly traded company brings about new responsibilities in terms of having to demonstrate profits to those investing in the company.

Recently, Coinbase CEO Brian Armstrong tweeted that they want to list every coin or token on their platform. This shift in listing policy has essentially done away with the “Coinbase Effect” where crypto project prices increase upon the announcement that they’re listed on the Coinbase Exchange. 

By way of example, the recent listing of the massively popular Dogecoin on June 3rd saw a price jump from 0.3732 to 0.4274. The 5-cent jump, while not horrible, was short-lived and quickly returned to pre-listing prices and lower.

Dogecoin $DOGE was created in 2013 as a meme. It has long been considered a meme coin for fun and with no serious plans of innovation or utility. Doge got a huge pump in volume and pricing thanks to a Reddit group WallStreetBets. 

Between December 31st, 2020, and January 2nd,2021 Doge saw an increase in trading volume and price. December 31st saw a price of $0.004682 and a daily trading volume of $85,498,337. January 2nd the price had jumped to $0.010615 with a daily volume of $3,421,562,680. That’s a huge jump in both price and volume over a 2-day span. Dogecoin has since held a consistent daily trading volume of over 1 billion dollars a day.

For any public company, profiting over the previous quarter or year is the aim. Coinbase’s entire profit basis is the collection of fees paid when customers buy and sell cryptocurrencies on the exchange. The higher the volume of trades on your platform the higher your profitability. 

Seeing this dramatic increase in Doge trading volume, Coinbase seems to have wanted a piece of that pie. This may in fact explain why they have reduced and or ignored rigorous evaluation protocols previously done before listing a coin. 

Coinbase even went so far as to encourage the trading of DOGE on its platform to hold a $300,000 DOGE contest. The only requirement was to buy, sell, or trade $100 worth of Doge to create volume and fees by the participants.

Then there is SHIB (Shiba Inu) a token that was created and tagged as “The DOGE Killer” in that it was simply designed to take DOGE out. Shib was launched on May 19th, 2021. It is currently available on Coinbase Pro for trading and purchases. In less than 2 months SHIB has been listed on an exchange that many long-term highly technical projects are yet to be approved for listing.

In closing, being listed on Coinbase has been and will continue to be a goal for many crypto projects. The potency of the listing power, however, could see a dwindling effect. I hope we will see more and more projects listed on exchanges with reputable tech goals, and standards. The last thing we need is to start seeing scams and projects with questionable repute make their way through to what was considered the safest exchange for newbies entering the crypto arena.

Steven Trapp
Steven Trapp

Steven Trapp is a writer, content creator, and blockchain tech nerd. Steve has made it his business to know the IT around blockchain technologies and strives to share that knowledge so everyone can understand the expanding world of crypto. Find him on Discord or Twitter Spaces talking about anything crypto-related. His focus includes cybersecurity, technology, and outreach to the Japanese crypto-community.

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