Coinbase Advanced Trading platform dominates market

0:01I'm ashon Addison from the cryptocoin show and today on blockchain interviews we have back with us Scott Shapiro head of trading at coinbase Scott welcome back to the show thanks for having me it's great to be back likewise it's been a few years since we last had you on and I know coinbase has grown significantly and the industry overall with ETFs institutional

0:23investors uh more assets on coinbase uh I'm excited to dive into all the recent updates I would love to start out our conversation Again by uh first of all hearing a little B on your background um how exactly you got into this and and why you became so interested in it yeah crypto has been something I've been really interested in for probably 12 years now I first learned

0:48about Bitcoin in 2013 and coinbase was the place where I bought my first Bitcoin but at the time I was working in web to uh at Facebook uh meta uh building advertising products back when nobody thought that social media advertising could work and spent about a decade in that industry pretty much the whole 2010s and after I learned about Bitcoin in 2013 and then learned

1:16about etherum and just got more and more exposed to things like Defi and other l1s and eventually l2s I just realized that this was something I had to do full-time I couldn't just work in web 2 and in you know big Tech and be on the sidelines and so in 2019 I made the jump to join coinbase and it wasn't something I took lightly because it was a big career change different industry a much

1:43smaller company a private company 2019 for those who remember was not an exciting Market in crypto it was pretty bare Market kind of like 2022 2023 and I have no regrets everything has worked out really well in the past five and a half years coming up on six years and uh had a great ride at coin base ever since that's an awesome story and yeah no regrets um I maybe we're

2:11working blockchain but I feel like everybody in those web 2 uh traditional social companies like if they if they did what we've done they would have no regrets too because it's just so exciting and Innovative and I know your team has worked on a lot since since you've joined uh maybe you can highlight some of the things you and your team have built so far in those six years and

2:33and what's been most impactful for you yeah I think the biggest thing has been taking things that are really complex and Distilling them down in a way that can scale to millions or tens of millions of people and a couple things I worked on when I first joined before I was kind of Allin on trading um were things like usdc rewards being able to pay rewards on a stable coin in 2019

2:59like who knew what a stable coin was or how to do rewards um launching our staking products um so taking something where you had to run your own Baker or your own validator and you know accept slashing risk but that down into like a simple mobile app with two Taps that would allow you to start staking on a bunch of different networks um and then now more with trading right taking

3:23really complicated Concepts like Perpetual Futures and Distilling them down in a way that works with um a very you know safe easy to use trading product um that you know integrates with your Fiat rails with your bank account with your spot trading um in an exchange where you have a counterparty you can really trust um and not have to worry that your funds will still be there so

3:48there's kind of a thread through all the things that I've worked on here and I think that'll continue into the future too yeah no I really love that breaking down the barriers to entry and uh lower ing the technical complexities I feel like in the traditional world we used to not very often see you know 16year olds 18y olds like trading in the stock

4:10market I felt like there was more of a barrier a mind barrier to entry um and now with crypto people feel like I I you know I can be a professional Trader whether whether that happens overnight or they build up to it but the products making it easier to access uh easier to understand especially with those learn and earns you're talking about if if a

4:31$5 $10 little reward gets you into something and that gives you the orange pill to realize this is the future of of finance and banking then you and your team have done your job definitely and with the advanced trading you know to to dive more in on that because I feel like that's important um that's really where you have all the the options of of what you want to do it's

4:57not just usdc to bitcoin and one button which is great as well but there's so many different things you can do can you talk about the advanced trading part that you and the team have built at coinbase and what are the options functions that you can potentially do yeah this was an area that I think we frankly neglected as a company for a number of years and have really rotated

5:21back into uh Advanced trading so this is you think of like the day trader with six or eight monitors around their desk who's trading all day long and isn't hodling necessarily is moving in cash or usdc overnight and then in the morning again um taking positions looking for leverage maybe using apis to trade segregating their accounts with uh multiple

5:47different portfolios or sub accounts um and this is an audience that is really taken crypto by storm because the properties of crypto were just so interesting for people who love trading um and a lot of people have come to this from traditional trading backgrounds and you know fixed income or Commodities or something unrelated but crypto trades 247 it settles instantly it could be

6:10transferred instantly it scale using you know different blockchains and so we looked at this a few years ago and so we have to get serious here and the first thing we did was that we combined um our coinbase Pro product with the coinbase app so You' have one coinbase app with all of your funds and all of your payment rails and everything in one place and you could stake and you can

6:30ear yield and you can use coinbase card and you can trade with all the advanced features that people loved from coinbase Pro so we merg these things together we have what's called advanced mode now and you can toggle into that from that same app um and access lots of different order types uh bracket orders is something we recently launched um we're working on order types like tuwop time

6:54weight at average price uh we're also rolling out attached orders so you can set an exit Strate um when your open limit order is still pending so you can open and exit without having to do anything later after you're um you know now in the game um and then obviously derivatives like we talked about being able to let people go long go short with leverage and access you know instruments

7:18that we typically didn't have we were a spot only business for a long time um so this has been a big Focus for us we've made a huge push since we last talked in 2024 of U really putting ourselves out there on social media we started a new uh ex handle uh called coinbase Traders where we're speaking specifically to active Traders talking about everything

7:42that we're doing learning from them engaging them uh we have a great social media team that runs that account we've um hosted a number of events in a couple dozen cities around the world uh Miami and um Zurich and Singapore and showing up at token 249 and just really getting in touch uh with this audience and it's really worked well we've really seen a

8:03lot of growth um if if you look at the coinbase International Exchange which is kind of the backbone that's where all the liquidity sits for our Perpetual Futures products which is really the most interesting corner of derivatives in crypto we've seen phenomenal growth and in fact I think when we spoke last time about a year and a half ago we had not

8:26even launched that there was no way um for a retail user an individual investor to onboard and trade Perpetual Futures with coinbase at that time later in 2023 towards the end of the year we started rolling that out um and it grew very steadily and really hit an inflection point towards the end of the year all this data is public you can go on international. coinbase.com or you

8:49can look at some of the you know aggregator sites of different um exchange volumes and you can see just how much growth um in volume has happened on our our uh um Perpetual futures um as a result of that yeah that's really cool um to I think it's a great focus in getting that coinbase Traders and actually uh seeing hey there are people that are Advanced Traders

9:14trading on coinbase and with the with the different kind of financial products you have there with the derivatives time weighted average uh getting beyond my scope of of advanc trading uh it sounds like there's enough tools there for uh people who are Advanced to make that their home um one thing I'm curious though about is the the assets the the spot assets and then those assets moving

9:37into derivatives how do you decide which are the new assets to list and and making a balance between quality versus quantity and the demand of the advanced Trader saying hey we want to trade this yeah we take asset addition very seriously this is one of the most complicated things that exists at the company because we want to make sure that everything we list has satisfied a

10:03number of criteria we put out some blog posts that talk about the different things we do um Paul gwall who's our uh General counselor our head of legal and Jesse Pollock who's the head of Base uh product group at at coinbase did a live stream uh last week or two weeks ago where they talked in depth about our listings process and listings decisions and um it's something where we have a

10:26number of rigorous reviews across legal consider ations compliance um security to make sure that there's not um you know a way that like the token Creator can just steal all the funds of the token holders um and to make sure that once we have satisfied all that criteria that we can create an orderly and healthy Market that we can have sufficient liquidity on the buy and the

10:52sell side uh with enough book depth that when Traders start to come in um markets don't dislocate markets are healthy steady uh and that they can stay that way and so uh from the outside in it might look like coinbase's listings decisions are U not intentional uh but I can assure you that they are very intentional and I think we've published a stat in the past

11:17that something like 90% of assets we review do not pass our bar um which is unfortunate and we're always looking for ways where uh you know we can work with Regulators to improve that um because we really want to be able to offer everything I think we have about 270 is getting close to 300 spot assets for trading when I joined coinbase I think we had less than 20 uh so that's a

11:43lot of growth and we've um we have over a 100 perpetuals I think the latest count is around 120 or 130 many of those perpetuals by the way are not uh representing assets that coinbase has spot listings on and the reason for that the International Exchange is operated outside of the US and has slight different regulatory obligations whereas our spot exchange coinbase

12:08exchange is in the US right and has um a lot of us laws and regulations that we take very seriously yeah no that's that's a great note um and yeah 10x in the amount of assets listed is pretty good you know 270 assets there's Millions now and many low quality with the with the ease of creating tokens so I can see why a lot would be rejected and you want to focus

12:33on quality especially as the industry grows making sure that the good projects there's still a lot of great projects I know that I I'm pretty sure aren't listed on coinbase and hopefully one day uh if they can pass that high rigorous test so I'll look forward to seeing uh how that grows and you know with the growth of institutional interest in in Bitcoin and ethereum uh in 2024

12:57continuing now through this new admin Administration more likely uh is the advanced trading just for retail Traders or is there also like an Institutional play in that yeah great question so Advanced trading is part of the coinbase app the coinbase app is for individuals uh for people who are not professional money managers who are um not managing other

13:22people's money but they're investing their own capital and we have a separate product that is for um asset managers hedge funds ETF providers we call that coinbase Prime that's kind of our institutional grade product um that has built-in Prime brokerage services like um an execution desk that can help with overly counter block trading um it has features around

13:47pre-trade and pro post-trade allocation right if you're an ETF provider and you have multiple funds and you're buying a block of Bitcoin you need to allocate that Bitcoin to these different funds and make sure all the cost accounting works well um really kind of high-end things that the individual doesn't need um there's also not a mobile experience

14:06for coinbase Prime and I don't think it's any secret but the dominant platform that people use coinbase on is mobile um right because individuals always want to trade on the go but money managers are generally in the office doing their thing on desktop and trying to trade on the go on the weekends uh although some do um and so that's kind of how we draw the line there um

14:29coinbase versus coinbase Advanced uh okay yeah no that's good to know and it makes sense the the institutions are are at their desk I have seen a few on X that are you know using coinbase and they're on their phone but I think they just become obsessed when the market starts trading 24 hours a day seven days a week uh it's hard to put it down when you know you're making so much 5 days a

14:52week you're like what's the extra two days you know so um but that's where uh self-discipline comes in to actually take a break and touch grass um and when when you continue to grow Advanced trading how do you balance what's needed you know function I'm sure there's a limit in like okay now there's too much functionality there's too many different options we can do and it becomes

15:19overwhelming and actually lessens the user experience so where's that balance in making good users experience that's not too much stuff but just the right amount of products and tools that you need yeah I guess the way we look at it is that the standard coinbase trade experience has to work for everybody no matter who they are it whether it's you know a senior citizen or someone who

15:44just turned 18 and wants to take their hard you know part-time wage and put it into crypto it has to work for everybody Advanced does not like Advanced targets as specific segement of people who are thirsty for everything for all the bells and whistles um right all the order types we started with three order types now we have five order types we want to

16:03get to eight order types um before we you know begin to even think about resting on that front and we have a pipeline and a road map and we're executing against all that um you know something like charting we have a trading view integration with 108 different you know technical indicators that people can overlay and you can make your charts overly complicated very

16:24quickly it's easy to get lost when you're doing that but I think that's a feature not a bug of how we're building this product um same thing with our API so we have a rest API that you can use to build your own trading apps you can use one of the thirdparty developers that we're integrated with like in silico terminal uh or three commas um there's a bunch of these that do really

16:45good stuff and um Power and and kind of feature richness is a a a feature of and kind of a technical uh explicit design decision that we're bringing in now we have to do it in a coherent intuitive way we don't want to put stuff in weird spot that people aren't going to understand um or overload the app such that you open your mobile um coin Advan and it takes five

17:12seconds to load because we've jammed too much stuff in there we have to be really thoughtful about how we um cache data versus stream data and how we present data and how we give you toggles and options to customize the interface um because different people care about different things and um you know one man's stop limit is another person's um you know teop and and they should be

17:33able to make the decision about what they're seeing FR Center so we have more work to do on that customization front as well but we're just constantly talking to active Traders all over the world not just the US uh we're trying to really Branch out and talk to folks in Europe and Asia and Latin America and make sure we have a really good read on what they need and what the highest

17:53priority things for us to do are and we know we still have a long way to go um and we're not going to let up until we've gotten to a place that we think is you know a 10 out of 10 yeah no that's great to hear and there definitely are a lot of functions on trading View and and a lot of things I've have yet to explore on uh on Advanced trading as well so um

18:13but I'm sure there's other people that rely on those tools and everyone trades a little different so that's why you have to have that feature Rich so that makes sense um and you know I'm curious about the growing trend of decentralized trading and indexes and and coinbase having the centralized part and a balance between I'm sure decentralized trading is still a huge majority but

18:37there is that uh that growing interest in decentralized trading how does coinbase deal with that yeah so decentralized trading onchain trading is the future like we fully accept that um there's a very important role that centralized exchanges play right now and I think will play for a long time um but the world's moving on chain and We Know It

19:06And we um have made a lot of Investments there like we talked about with the Bas um layer 2 network uh that we've been building and that's barely not even two years old and is really captured the evm ecosystem by storm um coinbase wallet is a phenomenal app that uh we're doing a lot of work on it's going to get really good and offers a very native integrated

19:32trading experience and there's a number of competitors there too that offer self custodial onchain experiences and so uh one of the things we're thinking about is how can we bring in the power of onchain not just trading but overall to the coinbase app and one of the things you've seen us announc recently is the lending product where you can take uh

19:53Bitcoin in your coinbase account and with just a couple Taps you can collateralize that on chain borrow funds that are in the moro protocol which is not something that is an important detail but for this audience I think they might be interested in that um and then that usdc shows up in your coinbase account and you can spend it transfer it do whatever you want with it um but in

20:18this case the lender is the moro protocol um the counterparty are all the other people who have supplied uh to that Morpho pool um coinbase is simp helping you uh the user sign an onchain transaction um to facilitate that lending and then eventually the repayment of those funds for that loan um and there's a lot of other things that we're interested in exploring on

20:43that front too not just trading but other types of onchain things that people are doing right right from your coinbase account without having to um memorize a seed phrase and store a backup somewhere and you know worry about um losing access to that one day right because it's you know secured by the same security and pass key um that people love in their coinbase

21:05account yeah I no I saw that uh recent update and I think that's really cool because people get deep into uh crypto and Bitcoin they don't want to get give it up they're like I need to get some Capital somehow but uh I I I don't want to get I don't want to sell my crypto and back into the bank account so having products like that I feel like is of great growing interest um and and

21:28further to uh the base and coinbase wallet I actually know a lot of people that they you know maybe they don't have advanced trading on coinbase as their main trading platform but they're using base they're using coinbase wallet I feel like it's two great platforms that are driving millions of more people into the coinbase ecosystem which which helps

21:49you guys and um it's not just a centralized trading platform there's all these other tools that's right there's you know a family of really good apps that all work together and one of the usage patterns we see is that people know that there's a lot of assets that are tradeable on chain and we'll come to coinbase looking for those and they'll see that the asset

22:15is not available to buy on coinbase but there will be a call to action that says trade this on coinbase wallet and you tap that it then takes you to the coinbase wallet app deep deep links you onto the kind of swap screen for whatever asset you were looking at and then you can use the funds in your coinbase wallet to trade or you can on-ramp funds from your coinbase account

22:36maybe even from your bank account if you didn't have any other crypto in your coinbase account to then trade and we heard a lot of great things from people um about that experience it's still two apps though ideally we'd be able to do more of this integrated all on chain uh within the coinbase app this is something that we're thinking a lot about um it's kind of a parallel to some

22:53of the advanced trading uh approaches that we talked about too very cool and with base chain I feel like when decentralized trading and and dexes were getting started you know there's there's a limit to the user experience and the the inefficiencies compared to a centralized exchange like the speed transaction cost it seems like Bas has sort of so to say solved a lot of those

23:19problems it looks like there's a huge user base that's growing uh despite the market conditions being sideways or not up only and the the trading cost seems equivalent or maybe even better than than centralized trading yeah you know the the trading is not facilitated by the base team per se but by the developers who build liquidity pools on base and you have you

23:41know protocols like air drone that have built phenomenal uh pools and liquidity and following and have a really interesting incentive model and governance model that um seems to have worked really well and has grown liquidity on chain on base and there's a lot of other developers doing a lot of interesting things on base as well the base team has been pounding the pavement

24:02and going all over the world and um courting developers and um we've even done a couple Acquisitions of some teams to join base to make a more you know even robust um uh offering for developers in terms of U you know the onchain tools that they have you know through coinbase developer platform um the throughput That Base can handle there's been a lot

24:29of work to improve um you know the gas limit for for bass um the number of users that are on bass because uh developers want to go to where the users are um and then you know tools for those developers like advertising so they can you know acquire users for their apps we acquired a company called spindle um that is probably the most prominent web 3 focused um advertising product uh

24:53advertising network doesn't really exist that's my prior life and so I I you know think it's fascinating that we're we're focused on that too definitely and yeah know I'm really excited for the future of of bass and seeing what else more more applications more users there's still millions and millions of people who need to get into uh crypto and and

25:13realize the benefits of uh owning your own finances and I feel like uh Bas and and the coinbase team are going to be working hard to make sure that you know those millions of people are using your guys' platforms as the go-to choice totally so looking forward with the potential of more Millions coming in probably many millions in 2025 alone thanks to the administration uh new

25:38Administration being pro crypto and just overall people realize that uh as Bitcoin and crypto grows they need to get in on this movement uh what are you and the coinbase team doing to you know what what are you building or how are you looking to grow uh and get and catch those next millions of users yeah I think there's a lot of anticipation and optimism on the new

26:09Administration new cftc chair was just announced for example um SCC is uh you know full of you know new Folks at the leadership level um and it'll be really interesting to see exactly what regulation shakes out of this and what specific kinds of opportunities are enabled and so I think as opposed to saying that there's one one thing that we're going to go do now I think it's

26:33more of we need to just stay on the bleeding edge of where regulation in the US goes and other places too right there's elections and Regulatory um you know turnover not just in the us but as a business very focused on the US we take take the US very seriously and so we are making sure that we're ready to pounce on whatever opportunities come up um and that we're

26:58not just you know picking a winner right now of something interesting to go do and uh you know a lot of this revolves around I'm not an expert in this area but something that um you know had to learn a lot about is like Securities regulation and what is a security and what is not a security who regulates those things that we can't decide if there are securities or not today um is

27:24it the secc is it the cftc and so as all that gets shaken out I think it'll open up a lot of opportunity a lot of the growth frankly in crypto in the last year has come from mem coins a lot of the volume and trading and that's fine like memes are fascinating right it's like this interesting cultural moment and way of prescribing you know value in creating attention and information

27:47economics that like there's no like prior real web2 or web one or offline version of this like it's it's a very uniquely web three thing um but really I think like what I get excited about is when uh Fortune 500 start taking this seriously and say oh we can actually issue Equity uh on Rails or we can tokenize our trafi Equity um and offer a tokenized version of this U and that can

28:16be used in Defi and it can be used in you know dex's and maybe there's you know permissions in kyc that needs to move on chain um that that's where I think things start to go really mainstream um as opposed to crypto like finding its Niche um in areas that we wouldn't kind of consider mainstream uh in the past definitely I think that's a really important point in you know we'

28:41we've sort of proven out the model of okay we can trade faster cheaper uh Without Limits of you know 9 to5 UM and this is something that can be used by the traditional markets and now it's just once we have the administration hopefully pave that way to allowing uh you know opening the floodgates of yeah let's tokenize Securities let's get the Stock Market trading with t0o and all

29:08the time and and get those uh those major Fang stocks even on the blockchain so I'm looking forward to seeing how that plays out um Scott what's the best way to follow along with the updates for coinbase and and stay on the bleeding edge as a as a viewer to see what's coming out next yeah so so you can always follow me I'm just Scott shapir on Twitter just first name last name um

29:33coinbase Traders again specifically for that Trader audience is the place to go to um coinbase exchange coinbase assets coinbase International Exchange are all Twitter handles that talk about those more specific things obviously we have our overall coinbase you know main handle which is largely talking about kind of the highest level topics and my favorite thing that comes out of that is

29:56when we're previewing our new ads uh because I think our creatives are just incredible um so that's great great entertainment there those are the best places we have a Blog as well you know for people who want to go into more detail um and uh try to be active on our Reddit Community as well um but I think X is really where most of the action tends to

30:16go um and then in our products we you know announce new features so if you're using Advanced Crea and we launch a new order type or we have a new asset listing we try to make that very prominent uh to people who are there um as well definitely I'll leave some of those links in the show notes below and I'm looking forward to seeing what's coming out next for coinbase I really do

30:36appreciate you coming back on the show with all these updates it's great to see the growth of the industry and coinbase's growth alongside it uh would love to follow up again Scott in the near future that'd be great Ashton it was awesome to catch up today