Coinbase Launches Verified Pools to Reduce Counterparty Risk in DeFi
Introduction
Cryptocurrency exchange Coinbase has announced the launch of Verified Pools, a new service designed to reduce counterparty risk for decentralized finance (DeFi) participants. The service is intended to provide a more secure and efficient way for institutional and retail traders to access liquidity pools.
What are Verified Pools?
Verified Pools are liquidity pools that facilitate digital asset trades. However, unlike traditional liquidity pools, these pools are only available to users who have completed Coinbase’s identity verification process. This ensures a higher level of assurance for institutions that may have been hesitant to join DeFi markets due to concerns over regulatory compliance and security.
How does it work?
Verified Pools are powered by Coinbase’s Ethereum-centric Layer 2 network, Base, and utilize the Uniswap v4 protocol. The exchange has also partnered with Gauntlet, a risk management firm, to shore up liquidity. The pools are non-custodial, meaning users maintain control over their assets.
Benefits
The launch of Verified Pools is part of Coinbase’s broader efforts to remain compliant as it seeks to scale back access to some offerings, particularly in New York. The service is designed to provide a more secure and efficient way for users to access liquidity pools, while also reducing counterparty risk.
Regional Availability
Initially, Verified Pools will be available in select regions, including the U.S., Singapore, Netherlands, British Virgin Islands, Cayman Islands, and Channel Islands. To participate, users must complete Coinbase’s KYC process, providing a higher level of assurance for institutions.
Regulatory Environment
Coinbase appears to be in a favorable position under President Donald Trump’s administration, which is en route to making the country the "crypto capital" of the world with pro-crypto policies. After a years-long legal battle, the U.S. Securities and Exchange Commission (SEC) recently dropped its lawsuit against the exchange, clearing the way for Coinbase to operate more freely in the country.
Future Plans
Aside from Verified Pools, Coinbase has revealed plans to offer 24/7 Bitcoin and Ethereum futures trading on its Coinbase Derivatives platform in the coming weeks. The exchange also announced the launch of perpetual-style futures in the U.S., with extended expiration dates, further expanding its futures trading options.
Conclusion
Coinbase’s launch of Verified Pools marks a significant step forward in reducing counterparty risk in DeFi. By providing a more secure and efficient way for users to access liquidity pools, the service has the potential to increase participation in the DeFi market. With its favorable regulatory environment and future plans to offer 24/7 futures trading, Coinbase is well-positioned to capitalize on the growing demand for cryptocurrency trading.
Frequently Asked Questions
Q: What are Verified Pools?
A: Verified Pools are liquidity pools that facilitate digital asset trades. They are only available to users who have completed Coinbase’s identity verification process.
Q: How do Verified Pools work?
A: Verified Pools are powered by Coinbase’s Ethereum-centric Layer 2 network, Base, and utilize the Uniswap v4 protocol.
Q: Who can participate in Verified Pools?
A: Initially, Verified Pools will be available in select regions, including the U.S., Singapore, Netherlands, British Virgin Islands, Cayman Islands, and Channel Islands. To participate, users must complete Coinbase’s KYC process.
Q: What is the regulatory environment for Coinbase?
A: Coinbase appears to be in a favorable position under President Donald Trump’s administration, which is en route to making the country the "crypto capital" of the world with pro-crypto policies.
