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Author: Thejaswini M A
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Compiled by: Block unicorn
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There is a pattern that repeats across industries, eras, and markets. First comes explosive growth. Countless products spring up, each claiming to do one thing better than anything else. Specialized tools emerge, niche tools emerge. Consumers are told that choice is freedom, customization is power, and the future belongs to those who break the old monopolies.
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Then, quietly but inevitably, the pendulum swings back.
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Not because the experts were wrong, not because the overall system is great, but because the costs of fragmentation accumulate quietly. Each additional tool means one more password to remember, one more interface to learn, one more point of failure in a system you’re responsible for maintaining. Sovereignty starts to feel like a burden, freedom starts to feel like overhead.
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In the consolidation phase, the ultimate winner isn’t the one who does everything perfectly, but the one who does enough things well enough that the friction of leaving (and rebuilding the whole system elsewhere) becomes unbearable. They don’t lock you in with contracts or lock‑up clauses; they lock you in with convenience. A convenience born from countless tiny integrations and efficiencies that, individually, might not be worth giving up, but together form a moat.
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We’ve seen this happen in e‑commerce, cloud computing, and streaming. Now we’re watching it happen in finance.
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Coinbase just made a bet on which side of the cycle we’re about to enter.
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Let me rewind a bit.
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For most of its life, Coinbase was easy to understand. It was the go‑to platform for Americans to buy Bitcoin without feeling like they were doing anything sketchy. It had regulatory licenses, a clean interface, and customer service that, while often terrible, at least existed in theory. The company went public in 2021 at a $65 billion valuation, with the core idea of being the on‑ramp to crypto—and for a while, that worked.
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But by 2025, the “crypto on‑ramp” positioning started to look shaky. Spot trading fees kept compressing. Retail trading volume swung wildly with the cycle—soaring in bull markets, collapsing in bear markets. Bitcoin whales increasingly moved to self‑custody. Regulators were still suing the company. And Robinhood, which started as a stock‑trading app and later added crypto, suddenly surged to a $105 billion market cap—nearly double Coinbase’s. In 2021, over 90 % of Coinbase’s revenue came from trading. By Q2 2025, that share had fallen below 55 %.
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So, with its core product under pressure, Coinbase did what you’d do: it tried to become everything else.
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They call it the “exchange for everything” thesis—the idea that aggregation beats specialization.
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Stock trading means users can now react to Apple earnings at midnight with USDC without leaving the app. Prediction markets mean they’ll check the price of “Will the Fed cut rates?” over lunch. Perpetual futures mean they can lever a Tesla position 50× on a Sunday. Every new market is a reason to open the app, an opportunity to capture a spread, a fee, or interest on idle stablecoin balances.
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Is the strategy “let’s be Robinhood” or “let’s make sure users never need Robinhood”?
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There has long been a view in fintech that users need specialized apps. One for investing, one for banking, one for payments, one for crypto trading. Coinbase is betting the opposite: that once a user does KYC and links a bank account, they shouldn’t have to do it nine more times elsewhere.
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This is the “aggregation beats specialization” argument. In a world where the underlying asset is increasingly just a token on a blockchain, it makes sense. If stocks are tokens, prediction‑market contracts are tokens, meme coins are tokens—why shouldn’t they all trade in the same venue?
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The mechanics: you deposit dollars (or USDC), trade every asset, and withdraw dollars (or USDC). No moving funds between platforms. No minimum‑deposit requirements across multiple accounts. Just one pool of capital flowing between all asset classes.
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The more Coinbase looks like a traditional broker, the more it has to compete on traditional‑broker terms. Robinhood has 27 million funded accounts; Coinbase has about 9 million monthly active users. So Coinbase’s differentiation can’t just be “we also offer stock trading now”—it has to be the trading platform itself.
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Promise 24/7 liquidity across everything. No trading hours, no settlement delays, no waiting for your broker to approve your margin request while the trade moves against you.
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Does that matter to most users? Probably not yet. Most people don’t need to trade Apple stock at 3 a.m. on Saturday. But some do. If you offer a platform where they can, you get their flow. Once you get their flow, you get their data. Once you get their data, you build a better product. Once you have a better product, you get more flow.
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That’s a flywheel, if you can get it spinning.
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The Prediction‑Market Play
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Prediction markets are the strangest part of the bundle, and perhaps the most important. They’re not “trading” in the traditional sense—they’re structured bets on binary outcomes. For example: Will Trump win? Will the Fed hike? Will the Lakers make the playoffs?
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These contracts disappear after settlement, so there’s no long‑term holder base. Liquidity is event‑driven, meaning it spikes unpredictably and can vanish. Yet platforms like Kalshi and Polymarket saw volumes surge past $7 billion in November.
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Why? Because<span style=\"font-size: inherit"}
