Crypto Exchanges Cut Trading, Boost Rewards and Rebates

Coinbase, Bullish and Gemini reported lower trading revenue in the second quarter and are shifting resources to stablecoins, prediction markets and tokenized securities while adding rewards and rebates to attract deposits and liquidity.

Coinbase reported transaction revenue fell 22% to $599 million in Q2, with spot trading volume down 35% to $146.4 billion and derivatives volume up about 3% to roughly $1.061 trillion. The firm said average USD Coin (USDC) held across its products rose 44% year-over-year to $20 billion and that it captured about half of USDC economics. Coinbase reduced headcount by 14% in May, cut full-year cost guidance by $100 million and allowed USDC rewards to expand in the third quarter.

Gemini reported total exchange revenue of $12.5 million, a 27% decline quarter-on-quarter and a 38% decline year-on-year, with trading volume down 66% year-on-year to $3.8 billion. The exchange increased focus on its prediction-market business, tripling the number of market makers this year and introducing rebates for market makers and rewards for users. The number of bets in Gemini’s prediction market nearly doubled in the quarter and revenue from that product rose about 18% to $524,000. On its earnings call, Gemini reported “fee economics continued to improve in both retail and institutional trading segments.”

Bullish reported adjusted transaction revenue of $29.9 million after a 21% quarterly drop; that figure was 24% higher than a year earlier, the only year-over-year increase among the three exchanges. Bullish launched a rewards program to support trading activity and is expanding its tokenized securities business.

The difference between trading and non-trading revenue narrowed across the group. Coinbase’s gap between trading and non-trading revenue tightened from about $132 million to $44 million over the past year. Exchanges described the shift as a way to diversify income sources as spot and derivatives revenue proved volatile during the prolonged market downturn.

Platforms are offering higher USDC yields, rebates for market makers and user rewards in prediction markets and trading programs. Firms characterize those incentives as efforts to build liquidity and increase activity in newer products that generate recurring fees beyond spot trading.

The bear market that continued through the quarter coincided with lower volumes and compressed spot and derivatives revenue for the exchanges. Executives reported improved fee metrics in some trading segments, and some companies noted reduced share-price losses after a recent crypto price rally.