Coinbase, one of the largest cryptocurrency exchanges around is nearing its debut as a public company with a valuation of $100 billion.
As it happens, the IPO raises valuation questions about decentralised financial applications which are increasing in popularity.
Instead of starting a traditional IPO, the company is using direct listings and will trade under the ticker COIN. Shares will list on the traditional finance exchange Nasdaq.
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According to Bloomberg, the valuation is based on a share price of US $350 each during a private auction that ended on Thursday (12 March).
The auction will be the last time shares in Coinbase are traded on the Nasdaq market ahead of the public floatation, which is expected in late March. Some shares in the auction reached a price of US$375 each, reflecting a potential valuation of nearly US$100bn.
However, the Nasdaq has yet to set a reference price for investors ahead of the public listing, while the highly restricted private trading may not be truly indicative of the market’s valuation of Coinbase.
Coinbase reported that it had swung to a US$322mln last year amid a doubling in net revenues to US$1.14bn. The company has also raised around half a billion dollars from multiple backers.
In light of this development, could the Coinbase IPO be a standard-bearer for decentralised exchange valuations (bearing in mind that decentralised finance is arguably an even bigger fintech play than Coinbase)?
Trading volumes indicative of valuations?
Over the last week, Coinbase averaged trading volumes at $2.61 billion per day. In contrast, Uniswap has settled approximately $955 million per day, but at a much lower valuation of $16 billion.
When compared side by side, Coinbase is currently trading 38 times higher than its trading volume, whereas Uniswap is valued at just over 16 times its volume.
If valuations are an approximation of an Exchange’s usage and the Coinbase IPO sets the standard, then the Uni token would need to double in price from $30 to $60 to reach a similar relative valuation.
With another round of stimulus checks around the corner, to the tune of $1.9 trillion, valuations of all assets could be about to skyrocket again.
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