Coinbase Global Inc. is starting a marketplace for nonfungible tokens, or NFTs, looking to expand its revenue base by riding one of the hottest market trends of the past year.
The user experience of creating or purchasing an NFT — which represents ownership of a digital collectible such as a piece of art or trading card that’s made and stored on a blockchain — has been “lacking,” Coinbase said, and it’s hoping to make things easier.
Coinbase is working to allow people to create NFTs “effortlessly” and control them through decentralized contracts, according to a statement.
Coinbase is also incorporating social features.
Coinbase is getting in on NFTs after they soared in popularity this year, with daily sales peaking at around $268 million on Aug. 28, according to tracker Nonfungible.
Some NFTs have sold for millions of dollars. Just in the past month, the likes of Twitter Inc. and FTX have come out with new offerings or features. However, the space has been dogged with concerns over potential market manipulation and generalized hype about the ability to profit in the space.
The industry’s giant, OpenSea, had faced accusations of insider trading linked to its NFTs. Katie Haun, a general partner at venture firm Andreessen Horowitz who sits on Coinbase’s board, is also a board member at OpenSea, according to her LinkedIn profile.
Coinbase is looking to boost its service offerings in order to diversify its revenue, the bulk of which still comes from trading fees.
With companies such as Robinhood Markets Inc. stepping up their efforts to attract crypto investors, trading fees may be under pressure in the coming months and Coinbase has to find new ways to growth. It recently indicated that it wants to trade derivatives, for example. In August, Coinbase said that customer usage slowed at the start of its third quarter.
Coinbase went public in April, but its shares have slid since the first days of its debut. They are now trading at about $262, down 30.5% from their all-time high of $342 in April, partly as Bitcoin and other cryptocurrencies have remained volatile and amid heightened expectations for tightening regulations governing cryptocurrencies and related services.