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A major Bitcoin mining company has filed for bankruptcy. Meanwhile, SBF can be extradited to the US as soon as today. It’s about time.

Today, we take a look into Coinbase’s sliding stock performance while our Research team dives into the state of Polygon’s gaming ecosystem.

This is the Delphi Daily. Let’s dive in.

🚨 In Case You Missed It

Publicly-traded Bitcoin miner, Core Scientific files for bankruptcy.
Sam Bankman-Fried can be extradited to the US as soon as today.
DeFi protocol Ankr says an ex-employee caused a $5M exploit.
Brazil‘s crypto bill is set become law at midnight, regulating crypto providers and allowing public institutions to hold crypto.
The new management at FTX has located $1B in assets, including $720M in cash.

📊 Coinbase Share Price Hits an All-Time Low

Coinbase share price has reached an all-time low of $35 as the centralized exchange trades at a valuation of $7.93B on Nasdaq. Currently, this is 1.6x the cash and cash equivalents reported by the company in its latest quarterly filing.
Since the company’s listing in April 2021, the stock has closely tracked the total crypto market capitalization. Over the past two months, the stock has taken a further hit as it trades down -45% while the total crypto market is down just -12%.
Exchanges are highly cyclical businesses that suffer during bear markets when asset prices are sliding and there isn’t too much activity. In its latest quarterly filing, Coinbase’s total revenue was down -55% from $1.3B to $590M.
Moreover, the drama around the fall of FTX may have spooked many investors. Even as the episode benefits Coinbase by eliminating one of its largest competitors, it also reveals that exchanges still operate in a gray area of regulatory uncertainty.
The company’s business model depends on charging transaction fees to retail users. In its latest quarterly filing, retail users accounted for 16% of the trading volume and 94% of the transaction revenue.
Many market participants have also pointed to the use of stock options as the reason behind a falling share price. Nevertheless, the exchange has continued to hit all-time lows, currently trading at a market cap below Dogecoin and Cardano.

⚡ The State of the Polygon Gaming Ecosystem

The past six months within the cryptocurrency industry have been a calamity. From digital asset prices to protocol treasuries, metrics have plummeted.
However, transactions within the Polygon network have remained relatively stable despite the turbulent market conditions. The same has been true for DeFi, but not for Polygon’s gaming ecosystem.
Gaming transactions within the Polygon network have dropped 40% since late May, from 429k to 255k. Gaming transactions have lost 5% of their market share relative to the Polygon network overall, falling from 15% to 10%.
The basic assumption from declining transactions suggests that blockchain gaming is withering. Factors include declining players, unprofitable P2E rewards, and gaming dApps losing treasury runway. Obviously, this is not unique to Polygon.

A comparison of unique users portrays an opposing narrative. DeFi users have declined by 18% from May, as plummeting token prices resulted in dying yield farming opportunities and less trading-related activity.
Surprisingly, the number of unique users within the gaming sector has remained stable. Gaming users have increased by 1.4%, suggesting successful retention of users. Successful retention strongly correlates with the growth of Polygon users.
The number of unique users on the Polygon network has trended upwards, up 72% with users peaking at 5.9M during October. Relative to total Polygon network users, the percentage of gamers dropped by 16% to 23% in November.
For more on the state of Polygon’s gaming ecosystem, Delphi members can read our Delphi Pro report here.

🐣 Notable Tweets

Wintermute’s Plans

wintermute wnats to start an exchange, and they’re doing it now and preparing it for the next cycle which begs the question of what one should do during these times – well, should improve position on the chess board so u can dominate when next cycle comes along

– woid (@0xwoid) Dec 20, 2022

On the New Financial Surveillance Bill

This new financial surveillance bill is a PRIVACY NIGHTMARE. It “seeks to flip the entire purpose of blockchain on its head, turning it into a permissioned technology in which all users are surveilled by centralized gatekeepers.” @MartaBelcher

-Naomi Brockwell (@naomibrockwell) Dec 20, 2022