Two paths, one destination

Today, they are moving toward the same vision: becoming a financial super app.

Written by: Prathik Desai

Translated by: Block unicorn

Introduction

Hello everyone, Happy Year of the Horse! Last week, two highly watched emerging financial companies released their earnings reports within 48 hours. Both companies’ revenues fell short of expectations. These companies were quickly grouped into the same narrative: the cryptocurrency market is sluggish, trading volume is weak, and the good times are over.

But this view completely misses the point.

While the stock prices of Coinbase and Robinhood may be closely correlated with Bitcoin (BTC) prices, their future trajectories are not determined by BTC’s performance in Q4. They are gradually moving beyond the narrow definition that “company fate is tightly linked to the crypto cycle.”

Both companies are undergoing significant transformations—if you know where to look, you can see this in their financial data—but if you only look at the complex data from the last quarter, you might completely overlook these changes.

In reality, things are not so blurry. Just look at the data from the past few quarters and compare it with a series of product announcements they’ve made over the past 12 months, and it becomes clear.

The long-term development trends of these two companies reveal their respective directions, their bets on the future of finance, and importantly, when their paths begin to intersect.

In today’s analysis, I will dissect their stories separately, then explain their commonalities and what this reveals about the broader competitive landscape they are part of.

Part One: Coinbase - Betting on Infrastructure

Coinbase reported a net loss of $667 million in Q4 2025, which might make it seem like a terrible quarter. But numbers need to be interpreted in context. During that quarter, Coinbase also experienced an unrealized loss of $718 million on its crypto holdings, and a $395 million impairment loss on its investment in Circle. Excluding these non-cash accounting losses, Coinbase maintained 12 consecutive quarters of adjusted profitability.

The report shows adjusted net income of $178 million and adjusted EBITDA of $566 million.

While this may be reassuring, there’s one thing I find even more worth paying attention to.

Coinbase’s subscription and services (S&S) revenue in 2025 reached $2.8 billion, a 5.5-fold increase from the peak of the 2021 cycle, and double that of 2023. This indicates Coinbase’s revenue base is continuously expanding, covering areas like stablecoins, custody, and blockchain rewards. In Q4, the value of USDC holdings on Coinbase’s platform hit a record high of $17.8 billion, up 18% quarter-over-quarter. Currently, Coinbase holds more cryptocurrencies than any other company globally, accounting for 12% of the total global crypto holdings.

However, this portion of revenue is highly sensitive to interest rate changes. When rates and crypto prices decline, yields on stablecoins, staking rewards, and interest income from custody balances all decrease. This is evident from the company’s guidance for Q1 2026, which expects stablecoin and custody revenue to fall from $727 million in Q4 to between $550 million and $630 million.

Coinbase is systematically diversifying across multiple business areas, reducing reliance on the crypto cycle, which should boost investor confidence. Currently, Coinbase has 12 business units generating over $100 million annually, with six exceeding $250 million, and two surpassing $1 billion.

Coinbase’s acquisition of Deribit is the largest crypto exchange acquisition ever, enabling the company to tap into the high-volume derivatives trading market, especially during volatile spot market conditions.

Coinbase’s “Everything Exchange” vision is beginning to manifest beyond traditional finance. Earlier this week, Armstrong revealed on Twitter that the five largest global systemically important banks (G-SIBs) are collaborating with Coinbase.

JPMorgan has signed an agreement allowing clients to link their bank accounts directly to Coinbase. BlackRock’s Bitcoin ETF custody services are also operated through Coinbase’s infrastructure. These efforts suggest Coinbase’s long-term goal is to become the settlement layer accessible to large institutions during their on-chain financial activities.

Recently, Coinbase launched a prediction market that follows the same retail-oriented model. Launched two weeks ago, it introduces event-based trading, further expanding Coinbase’s “everything is tradable” vision. This creates a new asset class, generating additional revenue and giving customers more reasons to keep assets on Coinbase rather than transferring elsewhere.

While this new business line may not show significant short-term results, its strategic intent is clear. How do I know? Because prediction markets have become Robinhood’s fastest-growing business line, which is the best proof.

Now, let’s look at the other side…

Part Two: Robinhood - Deep Consumer Engagement

Robinhood’s Q4 performance was actually decent, but it was penalized for some inappropriate reasons. Due to declining crypto trading volume and the end of the football season, its revenue missed expectations. But for me, these are not the main points.

The most notable aspect is its average revenue per user (ARPU), which grew 27% year-over-year to $191, while paying users increased by only 7%. This indicates Robinhood is earning more from each customer without needing to rapidly expand its user base. Compared to its business model at IPO in 2021, this is a more diversified approach.

Where does the ARPU growth come from? Partly from the fastest-growing “Other Trading Revenue,” which increased 300% YoY to $147 million, mainly driven by the prediction market. Partly from options trading, which grew 41% to $314 million. Additionally, net interest income and gold subscription services also contributed.

Despite crypto trading revenue expected to grow over 40% YoY in 2025, 8 out of every 10 dollars of Robinhood’s revenue still come from non-crypto businesses. This ensures the company’s dependence on the crypto cycle remains relatively low.

3 Billion-Dollar Business

The biggest indicator of Robinhood’s future trajectory is its prediction market performance. CEO Vladimir Tenev called this product line, launched less than a year ago, Robinhood’s fastest-growing business, underscoring its importance. In its first year, it achieved an annualized revenue of $300 million and a trading volume of $120 billion, signaling a promising growth outlook.

Robinhood has also increased its investment in prediction markets by establishing a joint venture, Rothera LLC, with Susquehanna. Rothera LLC acquired MIAXdx in January 2026. This deal gives Robinhood its own CFTC-licensed exchange and clearinghouse, helping to build the infrastructure for prediction markets and enabling control over pricing, contract selection, and economic models.

Although the NFL season has ended, some short-term factors bolster Robinhood’s prediction markets. In January, NBA contract trading volume on the platform surpassed NFL contracts. The government shutdown also led to a surge in trading volume during the same week NFL season ended. Additionally, the upcoming FIFA World Cup and the Winter Olympics are on the horizon. Beyond sports, Robinhood is building a new non-sports category.

Diversification Challenges

Beyond prediction markets and Robinhood’s current profit models (including options, margin trading, and gold subscriptions), other factors will boost investor confidence. $HOOD is also building the next layer of distribution channels through private markets, family investments, and banking services.

Robinhood Banking launched officially a few months ago, targeting early customers. By the end of January, it had 25,000 paying customers with total deposits of $400 million. More than half of these customers have set up direct deposit, which Tenev considers the most encouraging sign. It means these customers are shifting their financial lives into the Robinhood ecosystem, no longer just experimenting. But compared to the platform’s $324 billion market cap, $400 million in deposits is still tiny. Banking is a long-term game, and Robinhood must be prepared for the challenges ahead.

While the world is busy building prediction markets, I believe the private markets could be Robinhood’s secret weapon—an area with little competition. Tenev also believes the private market’s scale could “exceed that of prediction markets.” Robinhood Ventures, a registered fund under Robinhood, aims to give retail investors access to private companies. It has not launched officially yet, but last year European users experienced it through stock token giveaways involving OpenAI and SpaceX, which also sparked some controversy. Robinhood Ventures is set to launch in the US in 2026, with a huge potential market. Tenev has repeatedly mentioned the ongoing $100 trillion intergenerational wealth transfer. If Robinhood can capture even a slice of this, whether through private assets shifting from institutions to retail investors, it could significantly alter its revenue structure.

The bigger challenge is managing customer expectations around tokenized equity versus traditional shares.

The private market as a revenue stream might start around 2026 but could take longer to fully develop.

Same Destination, Different Timelines

At first glance, Coinbase and Robinhood seem to be on very different paths. Indeed, they started from opposite ends of the financial spectrum. But now, they are both heading toward the same goal: becoming a financial super app. Their recent developments confirm this.

Robinhood entered finance through traditional means: commission-free stock trading, designed for users who find traditional brokers too expensive or complicated. Over five years, it has built crypto-native infrastructure on top of traditional finance (TradFi). Today, it offers margin accounts, gold subscriptions, credit cards, banking products, derivatives exchanges, prediction markets, and tokenized strategies.

Coinbase originated in the crypto space, providing the most trusted methods for buying, storing, and trading digital assets when most Wall Street firms avoided crypto. Over the past five years, Coinbase has expanded from its core crypto-native business into traditional financial consumer products like stocks, subscriptions, credit cards, and now prediction markets.

Both are rapidly converging toward the middle, and in the next decade, retail financial competition will unfold here.

Prediction markets are currently the clearest stage to see their direct rivalry. Robinhood is ahead in this area, having launched its prediction market just two weeks before Coinbase. $HOOD also has its own exchange and clearinghouse, while $COIN collaborates with Kalshi but has no exclusive agreement.

Tokenization will be another more complex area of competition. Coinbase sees it as an infrastructure issue—issuing tokenized stocks internally and establishing regulatory relationships to enable on-chain trading of bonds and securities. Meanwhile, Robinhood views it as a consumer access issue—opening up tokenized stocks of private companies for trading. They are choosing different paths to address different aspects of the same problem.

The private market could become the third arena where these two converge. Coinbase has achieved on-chain capital formation through its acquisition of Echo, while Robinhood is taking its first steps via Robinhood Ventures, bringing private company investments to retail users.

Both companies understand that the broader market will trust the one that builds the deepest financial relationships and meets investors’ growing needs. It’s one of the most challenging fields for market acceptance—people won’t easily switch banks, brokers, or custodians. If a platform can let users manage their retirement accounts, bank info, prediction market positions, and eventually their private equity portfolios, it will be very hard for competitors to steal customers away.