Coinbase Unveils Web 3.0 Launchpad for NFT, Gaming and DeFi Applications

A common saying in crypto is that bear markets are a great time to build the next set of mainstream products and applications. Coinbase, the largest crypto exchange in the US, wants to ensure that this development happens on their platform.

“We saw DeFi summer in 2020, then we witnessed NFT spring in 2021. Next cycle it’s Web 3.0’s turn,” says Coinbase Chief Product Officer Surojit Chatterjee, referring to the concept of a more decentralized internet with reduced corporate control . “But we realized that to grow this ecosystem, we need to help developers because we can’t invent everything ourselves.”

In an exclusive interview with Forbes, Chatterjee explained that this help comes in the form of a technology stack, called Node, which will help everyone from developers of non-fungible tokens (NFTs) and games to decentralized entrepreneurs build applications that can automatically interact with blockchains like Ethereum. “If you’re a developer, the first thing you need to do is spin up a blockchain node so you can read/write to the blockchain, query data and monitor your application. This is very complex and not everyone’s cup of tea. Node will provide developers ability to launch and manage nodes on a very simple and user-friendly platform.

Here’s what all this means: Imagine a developer wants to build an NFT trading platform. They need to create a website and an interface for users. However, since this is a blockchain-based application, it also needs a way to interact with the platform so that any transactions are published across the network. These features can require completely different skill sets, and if the two platforms don’t sync properly, there could be lost tokens, bad user experiences, or security vulnerabilities.

Node will start by supporting Ethereum, with the expectation of moving to other blockchains.

For Coinbase, the launch of Node represents a new phase of Coinbase Cloud, a software platform that offers a complementary set of services to the trading business that dominates its revenue base. Originally launched as a staking platform aimed at institutions using cryptocurrency as collateral as they seek to earn more by backing their blockchain, Coinbase Cloud now aims to be the launch pad for a whole suite of Web 3.0 applications.

In fact, it was one of five priority products listed by CEO Brian Armstrong during Coinbase’s Q2 analyst call last month — others include its self-hosted wallet and prime brokerage offering — when the company revealed it had lost a whopping $1.1 billion in the interim. of the crypto slump that has seen the stock fall 72.94% so far this year.

A bright spot from the results, however, was the growth in the exchange’s subscription and service products, which have grown 44% year-on-year. In fact, Subscription and Services revenue contributed 18% of total net revenue, up from 4% a year earlier. The company does not distribute these figures in specific business lines.

Chatterjee is optimistic that this trend will continue, but he also preaches patience. He declined to provide any financial goals or adoption goals and numbers. “I think it’s too early to talk about these. First we want to build a great product that delights customers, and then numbers and calculations will follow.”

As for the potential customers, it is also important to note that Coinbase is not developing this product in a vacuum. In fact, it competes against two industry heavyweights. One is Alchemy, a $10.2 billion firm that supports eight different blockchains such as Ethereum and Solana, 10 million end users and $100 billion in transaction volume. In addition, Ethereum-focused Infura, which is a mainstay of Ethereum.

To beat out this competition, Chatterjee first puts his faith in Coinbase’s strong record of security and ease of use, along with the intuitive nature of its interlocking products. “It’s 1+1 = 10,” he said, citing capabilities such as staking, custody and identity. “Plus, as a developer, you can get access to millions of users.”

Long-term success may also depend on Coinbase’s ability to strike the right balance between offering access to a centralized product suite that runs on top of decentralized blockchains, which privacy-conscious users may find troubling. “Blockchain data security models are decentralized, and we’re not changing any of that. We’re creating easy access to the blockchain,” Chatterjee says. He also claims the company won’t collect individualized user or transaction data, a key point of concern for users of mainstream tech companies like Facebook and Google.

This point is particularly relevant today after the US Treasury’s Office of Foreign Asset Controls last month sanctioned Tornado Cash, an open source platform that can be used to obfuscate and break traces of financial transactions. Armstrong has pushed back against what he sees as government overreach, going so far as to fund a lawsuit against the Treasury, arguing that Coinbase would abandon its Ethereum staking business if it was pressured by the US government to block certain transactions.

When asked if Coinbase Cloud could allow the company to censor activities on applications authorized by its platform, Chatterjee claims that the company does not have the ability to take such actions. “It is fundamentally different [from Tornado Cash]. We are just an access team.”

“I am excited about the product. It’s a free service for developers to build Web 3.0 products in minutes.”