Coinbase ‘throws in the towel’ on NFT Marketplace despite weak volume

Cryptocurrency exchange Coinbase signaled yesterday that it is not pulling back from its NFT venture anytime soon. This despite a drastic drop in volume over time and new scrutiny from shareholders.

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

A question from the shareholders focused on the stock exchange’s NFT venture, a platform that was launched last spring. It asked Coinbase to reveal how much money the company has lost related to the NFT market and how it plans to “reduce the burn” that comes with running 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 just 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 Open sea and Obscuritywhich have seen around 303,000 and 53,000 sales respectively over the past week.

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

But Choi appeared to say that Coinbase is now devoting fewer resources to the project 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 950 employees, the exchange’s second round of layoffs in the past year after reducing its workforce by 1,100 last June. The company declined to comment on the extent of layoffs related to Coinbase NFT.

“The Coinbase NFT team has adjusted their resources to focus on the areas of greatest impact for our users,” a Coinbase spokesperson said Decrypt. “We bring increased focus and efficiency to a smaller set of high-impact focus areas within Coinbase NFT.”

NFTs are unique digital tokens used to prove ownership of an object, often digital art. And the NFT trading ecosystem has recently undergone an upheaval, as Blur and OpenSea battle for the top spot, causing OpenSea to slash creates royalty recently as Blur’s volume raced forward.

Meanwhile, Coinbase NFT has scaled back some elements of its business. The venture said it is “pausing” future NFT drops with creators to “focus on other features and tools requested by creators,” according to a recent tweet.

But as Blur and OpenSea place less emphasis on royalties for creators in the overall NFT market, Coinbase could benefit from the shift. The team behind a project called Deathbats Club recently said that Coinbase NFT is now the preferred platform and that trading of the project’s tokens on OpenSea would be blocked.

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

Although the project scaled back in some ways, a spokesperson for Coinbase said Decrypt The NFT market has a long way to go. “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 community.”