Coinbase’s equity token trades over $1 billion, but depth of liquidity is questionable. The US$100,000 order test on the Base chain revealed the gap between the quotation and the actual acceptance capacity, and the risks were highlighted when the US stock market was closed.
By Liam 'Akiba' Wright, cryptoslate
Compiled by: Saoirse, Foresight News
Statistical trading volume of more than $1 billion creates the appearance of booming trading in Coinbase’s stock tokens. But for currency holders, the core question is how much selling the current market can handle and what the transaction price is, especially during the U.S. stock market closing hours.
Pre-market testing on September 23 showed that each of the 10 equity tokens issued by Coinbase on the Base chain had a simulated buy and sell quote path of $100,000. The estimated proceeds from selling are 0.06% to 0.71% lower than the token valuation given by KyberSwap. This type of quotation is only calculated for an instantaneous single order and cannot represent the market's ability to undertake simultaneous selling of multiple orders.
During the verification period, the total book balance of the 10 core Aerodrome stock/USDC fund pools was approximately US$12.97 million. Individual pool sizes range from approximately $818,700 for MSFTc to approximately $2.11 million for NVDAc. The balance includes both stock tokens and USDC. This number alone cannot determine the amount of funds that can accept selling orders within a specified price range.
Dromos Kitchen's stock token data panel shows that as of September 23, the cumulative trading volume of this type of tokens was approximately US$1.02 billion, and the total market value of the tokens was US$19.82 million. The community's self-built data annotation prompts that data may be missing. Trading volume is the cumulative result of historical transactions and does not equal the buyer's capital pool waiting to accept large sales orders at any time.
What does a $100,000 quote say?
The table below pairs Aerodrome pool book balances with KyberSwap’s estimated buy and sell exchange paths. The quotation difference represents the extent to which the route's estimated output dollar value is lower than its input valuation. It does not benchmark the token price against the underlying US stock price, nor does it represent actual transactions.
Calculation method: Fund pool data is taken from 10 Aerodrome Slipstream 3 stock / USDC records at 08:00 UTC. KyberSwap routing data is captured from 08:02:01 to 08:02:42 UTC. Displaying the price by token, the sale size is approximately equal to $100,000; KyberSwap’s own input valuation has a small deviation. Values are rounded, gas fees are calculated separately, no real transactions are sent, and transactions need to be constructed separately after calling the API.
When the transaction size of a single token is about US$10,000, the selling price spread is only 0.01%–0.12%; when the order is enlarged to US$100,000, the spread generally widens. Some trade routes aggregate Aerodrome and other liquidity sources, so estimated prices span multiple pools. But this additional liquidity can change quickly once market makers and liquidity providers adjust their quotes.
The book balance of the fund pool relies in part on incentives to retain liquidity providers. According to Aerodrome's capital pool governance rules, when liquidity providers pledge their positions to obtain AERO token emission rewards, they will give up direct transaction fees, and the fees will be distributed to users who vote to determine the flow of rewards. Handling fee income and AERO token rewards are two independent economic sources of the fund pool.
During the August launch phase, Beefy said Coinbase was offering USDC incentives via Merkl every two weeks, with Beefy layering Aerodrome token emissions to provide additional rewards. This describes the liquidity incentive plan in the early stages of launch, and not all fund pools currently have verifiable stable returns. Regardless of the historical trading volume of a token, liquidity providers can withdraw funds once incentives or governance votes are diverted to other targets.
Coinbase stock tokens can still be traded 24 hours when the U.S. stock market is closed, and the Aerodrome capital pool provides secondary market liquidity, but the quoted price is only an estimate and does not equal the real sellable capacity.
When the underlying U.S. stock market is closed and tokens can still be traded, the risk of the capital structure will be highlighted.
Base documentation states that Coinbase stock tokens are backed by underlying stocks held in regulated custody accounts and are only available to qualified users outside the United States. The developer documentation mentions that no permission is required for secondary market transactions of tokens, but there is address risk control; the primary minting and redemption rights for underlying stocks are only open to authorized participants.
While the U.S. stock market is closed, tokens can still be circulated on the chain. The Base document also states that the Chainlink stock oracle will maintain the price of the previous trading day during non-trading hours, and on-chain token transactions will not be suspended. When the holder sells after the market opens, the oracle quotation will stay at the old price. The immediate selling price is completely determined by the secondary market liquidity provider. The primary redemption channel is not in the hands of ordinary users.
The routing test on September 23 proved that even if the capital pool is not large, a single order of $100,000 can still get a simulated quote. However, during the oracle price freeze period, AERO governance voting changes, liquidity withdrawals, and sudden after-hours stock news may cause drastic changes in quotations.