数字资产备忘录：如何投资以太坊？Coinbase看起来最符合以太坊利益

Gautam Chhugani+91 226 842 1416gautam.chhugani@bernsteinsg.comMahika Sapra+91 226 842 1408mahika.sapra@bernsteinsg.comSanskar Chindalia+91 226 842 1445sanskar.chindalia@bernsteinsg.com The Digital Assets Memo: How to invest in Ethereum? Coinbaselooks most ETH-aligned (109/n) Ethereum has been up 80% since June 5 (when Circle trading commenced). With strong investor appetite for Ethereum, wewalk through different investment options for participating in the ETH growth story... Ethereum has been up 80% since June 5, when Circle listed and market discovered most stablecoins are minted on Ethereum network. Withstrong investor appetite for Ethereum, we walk through different investment options for participating in the ETH growth story. 1. ETH ETFs:Investors can consider investing in the leading ETH ETFs to gain spot ETH exposure (See Exhibit 6). ETH ETFs buy ETH spotand hold it today. However, recently, BlackRock has submitted a proposal through NASDAQ to add staking to its iShares Ethereum Trust(ETHA). This amendment would allow the ETF to generate yield by validating Ethereum network transactions. If approved, the change willfor the first time incorporate a native blockchain economics into an ETF, i.e Ethereum’s proof-of-stake mechanism generating a native ETHdenominated blockchain yield. The current ETH yield stands at ~2.9%. 2. ETH treasury companies:Akin to MSTR, ETH has seen the rise of ETH treasury companies. ETH treasury companies deploy equity anddebt capital to buy ETH spot from the market as a long-term treasury asset. ETH treasury companies are differentiated from ETH ETFs - 1.Active ETH acquisition strategy - ETH treasury companies can be opportunistic with capital raising and deployment depending on marketcycles by being contrarian to market cycles i.e ETFs maybe selling off while ETH active strategies maybe deploying more capital; 2. Addmodest leverage and actively manage balance sheet risk; 3. Take advantage of equity market sentiment (reflected in high/low premium toNAV) to toggle between equity and debt actively to buy ETH; 4. Actively deploy ETH in ETH staking pools/on-chain finance strategies to earnoperating income from treasury asset to design new-income linked debt products and manage overall debt costs, etc. However, investing inETH treasury companies carries the same risks as picking an active portfolio manager. You need to pick not just the best performing, but theone who manages long-tail risks. 3. Investing in public companies building on ETH:Within our coverage, Circle, Coinbase and Robinhood are actively building on theEthereum ecosystem. Circle:Circle’s USDC is minted and settled on Ethereum. More than 60% of USDC supply is on Ethereum and another ~10% is on EthereumLayer 2 chains such as Coinbase’s Base chain, Arbitrum, etc. Over the last 3 months, USDC’s total supply has increased by 7% to over$65Bn today. The rise of Ethereum and its growing on-chain financial ecosystem drives demand for USDC as collateral in smart contracts(e.g trading/lending/asset management applications) as well as settlement currency/collateral as more layer 2 chains are deployed on theEthereum ecosystem. Coinbase:Coinbase is one of the leading Ethereum-aligned public companies. Coinbase runs one of the largest Layer 2 chain on Ethereum(Base chain). Base chain settles more than 9Mn transactions per day (July avg.) across stablecoins, trading, financial applications andconsumer social applications. Base has no native token, but the transaction gas fees are settled in ETH. Thus, Coinbase earns Base chainSequencer fees in ETH terms (ARR $75Mn). Base is also now the leading chain in terms of total token deployments and Coinbase recentlyintegrated all the Base chain tokens within its primary exchange platform, earning incremental broking fees (in ETH terms). Coinbaserecently launched Base App, their latest consumer wallet app for buy/sell/hold/transfer of crypto including stablecoin payments. Coinbase also maintains a large ETH treasury of $590Mn (136,782 ETH). From a revenue materiality standpoint, a rising ETH followed by several ETH-linked ecosystem tokens leads to a surge in tradingvolume and fees for Coinbase. As Coinbase highlighted in its earnings, July trading fees are tracking ~40% higher vs. Q2 averageled by recent surge in trading activity (with ETH price action being a strong driver, in our view). In Crypto lingo, this marketstructure is called the ‘Alt-rally’ i.e. when digital assets other than Bitcoin rally stronger relative to Bitcoin. We believe, the Alt-rally has commenced (reflected in recent ETH outperformance) and Coinbase will be the biggest beneficiary, given its long list of250+ tokens listed and now the long-tail of Base chain tokens integrated in the Coinbase App. Coinbase’s 10% of total revenue isstaking revenues (with ETH being the majority), which should inflect with higher ETH prices. Thus, we expect Q3/Q4 to be strongtrading volume quarters, leading to sell-side consensus a