A new analysis from JPMorgan suggests a potential native token for Coinbase's Base blockchain could reach a market valuation as high as $34 billion. This development, alongside other strategic shifts, could significantly impact Coinbase's future revenue and stock performance.
The investment bank's research note outlines a scenario where the introduction of a Base token, combined with optimized user rewards and a changing competitive landscape, could propel Coinbase's stock price higher over the next two years.
Key Takeaways
- JPMorgan analysts project a potential market value of $12 billion to $34 billion for a native Base token.
- If Coinbase retains a 40% stake, it could represent a $4 billion to $12 billion opportunity for the company.
- The analysis also points to a potential $347 million annual earnings boost from restructuring USDC rewards.
- These factors contribute to a projected Coinbase stock price of $404 by December 2026.
The Multi-Billion Dollar Token Question
Analysts at JPMorgan have placed a significant potential value on a yet-to-be-released token for Base, the layer-2 blockchain developed by Coinbase. The valuation range is estimated between $12 billion and $34 billion, depending on market conditions and adoption.
While Coinbase leadership had previously indicated that Base would not have its own token, recent commentary suggests a possible change in strategy. This shift has captured the attention of market observers, who see it as a major potential catalyst for the company.
A Significant Stake
Should Coinbase decide to launch a token and hold 40% of the total supply, the direct value to the company could be substantial, ranging from an estimated $4 billion to $12 billion.
This potential windfall is a key component of JPMorgan's optimistic outlook on Coinbase's stock (COIN). The bank's analysts have set a price target of $404 per share by the end of 2026, representing a 14% increase from current levels.
Base's Dominance in the Layer 2 Space
The high valuation for a potential token is underpinned by the existing success of the Base network. It has rapidly emerged as a leader among Ethereum's layer-2 scaling solutions, which are designed to offer faster and cheaper transactions.
What is a Layer 2?
Layer-2 blockchains like Base operate on top of a main blockchain (in this case, Ethereum) to process transactions more efficiently. They help reduce congestion and fees on the main network while still benefiting from its security.
According to data from DefiLlama, Base's decentralized finance (DeFi) ecosystem holds over $5 billion in total value locked (TVL). This figure makes it the largest among all Ethereum layer-2s and the sixth-largest DeFi ecosystem across all blockchains globally.
This strong market position provides a solid foundation for a native token, suggesting it would have immediate utility and demand within a large and active user base from day one.
Strategic Shifts Beyond the Token
JPMorgan's analysis highlights that a Base token is just one of several strategic levers Coinbase can pull to enhance its profitability.
Optimizing User Rewards
Another significant opportunity lies in revamping the company's rewards program for the USDC stablecoin. Analysts suggest Coinbase could adopt a model similar to Robinhood's Gold program, which offers higher yields exclusively to premium subscribers.
By focusing rewards on its Coinbase One customers and reducing or eliminating yield for other users, the company could see a substantial financial benefit. At current interest rate levels, this change is projected to boost annual earnings by approximately $347 million, which translates to about $1 per share.
Navigating the DEX Landscape
The threat from decentralized exchanges (DEXes), which saw rapid growth earlier this year, appears to be stabilizing. JPMorgan notes that the once-breakneck expansion of DEXes has stalled, creating an opening for centralized platforms like Coinbase.
Coinbase is not just watching this trend; it is actively integrating DEX technology. In June, the company announced plans to incorporate decentralized exchanges directly into its mobile app. This move is designed to vastly expand the number of assets available to its users.
"Coinbase will be going from one asset 13 years ago in Bitcoin to hundreds of assets today to soon having every asset onchain available to trade in the Coinbase app by default."
This integration allows traders to access millions of different crypto assets, far beyond the few hundred currently listed on Coinbase's main platform. Analysts expect Coinbase to monetize this expanded access by collecting sequencer fees through its Base blockchain, creating another robust revenue stream.
