Why Coinbase opted to go for DPO instead of IPO?
The companies make their roots strong by issuing shares to the general public. However, the strategy opted by them gets vary according to their analysis.
Coinbase is among the crypto exchanges to witness a successful DPO.
In this read, we will discuss how Coinbase DPO become successful instead of IPO and the thought that let the exchange take this decision.
How it begins….
Coinbase DPO became a hot topic when the exchange decided to go public directly instead of IPOs. After completing all the necessary formalities and the procedure involved in it, in compliance with the US Securities and Exchange Commission, the exchange went public on April 14, 2021.
Coinbase is already on the list of the top exchanges where you can trade with more than 90+ crypto products like Bitcoin, Litecoin, Ethereum, etc. Established in 2012, by Brain Armstrong this exchange offers secured funding from pioneering VCs like Union Square Ventures, Draper Fisher Jurvetson, and many others.
The platform makes its revenue from the commission and the fee involved in the trade of cryptocurrencies. The marginal fees comprise more than 96% of its total revenue.
Why did it decide to go for Coinbase DPO?
Starting from the basics, alternatively referred to as “Direct Listing” the term coinbase dpo is a short term used for “Direct Public Offering”. You might have heard of the IPOs which is quite a general term. IPO involves the creation of new shares which are underwritten by the financial institutions and are then offered to the public for sale. This is a costly process and involves a heavy bank fee.
On the other hand in DPO, new shares are not created but the existing shares are offered to the general public. Moreover, there is no need for the underwriter to act on the process of going public. The exchange choose to go for DPO because of the low cost involved in it.
Furthermore, DPO is comparatively an attractive and fast process as compared to IPOs.
Final Verdict
Coinbase DPO allows to sell out the existing shares instead of creating a new ones. With the DPO, the stakeholders will be able to convert their stakes into sellable stocks. This will result in making the price movement less volatile. It gives you more control compared to the IPO because DPO eliminates the involvement of the third party.
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