Coinbase is really getting into the DeFi game. The crypto giant just started its second Stablecoin Bootstrap Fund to make decentralized finance more liquid. This time, they're going all out. In their announcement on August 12, they said that the fund would focus on protocols on several blockchains, starting with Aave, Morpho, Kamino, and Jupiter. So, if you're a protocol looking for liquidity, Coinbase is the place to go!
I think this is a smart move by Coinbase because USDC has already become the most popular stablecoin in DeFi. The Bootstrap Fund, which started in 2019, helped USDC get into some of DeFi's most important protocols, like Uniswap, Compound, and dYdX. Now, USDC has a huge total value locked (TVL) of $8.9 billion and an annual on-chain transaction volume of $2.7 trillion. What a great story of success!
How Coinbase's Fund Could Grow DeFi and Lower Rates
What is behind this new project? A spokesperson for Coinbase said that we are at an "inflection" point for financial services on the blockchain. With $40.7 billion in active DeFi loans, it's clear that the DeFi ecosystem is growing quickly. A lot of this growth is due to crypto-backed loans, but Coinbase is quick to say that they are only one reason for the new fund.
The goal here is clear: make sure that liquidity moves easily through the DeFi ecosystem. Coinbase wants to give users more reliable rates by adding liquidity to both established and new protocols. Also, adding liquidity to USDC in decentralized money markets could lower the stablecoin's borrowing rates, which could make it more appealing for on-chain leverage.
Coinbase is also looking ahead. They want to grow this fund so that it can give liquidity to even more protocols and stablecoins than the first four. This could bring even more money on-chain, which would be great for DeFi. They are especially interested in helping teams or projects that are about to launch or are just starting to grow stablecoins.
In conclusion, Coinbase's Stablecoin Bootstrap Fund is going to make a big splash. I think this fund will only make things worse for USDC, which is already the most popular cryptocurrency. It will take the DeFi ecosystem to new heights. I'm looking forward to seeing how this turns out!
Tanya Petrusenko
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