In Brief:
- Coinbase offers non-US customers the ability to earn yield with their crypto holdings through DeFi.
- The exchange aims to make DeFi more user-friendly and accessible to users.
- Coinbase users will be able to receive DeFi yield via stablecoin Dai.
Global cryptocurrency exchange Coinbase announced to offer users in over 70 countries the ability to earn yield with their crypto holdings through decentralized finance (DeFi).
Coinbase plans to make DeFi more user-friendly and accessible, according to the firm’s blog post, because accessing DeFi protocols can be costly and has a pretty difficult user experience.
On Dai, a stablecoin designed to be pegged to the US Dollar, users will be able to receive DeFi yield. Dai is deposited into Compound Finance, an industry-leading DeFi protocol, when they opt in to earn DeFi yield.
The APY for supplying DAI fluctuated between 2.83 percent and 5.39 percent throughout the month of October, indicating that the Compound’s rates are variable.
Coinbase stated, “The higher rates reflect both the unique access to global liquidity and increased risk that can come with DeFi,” Coinbase said.
One way DeFi protocols manage this risk is through over-collateralization, which involves storing surplus assets to cover future losses.
Users’ Dai remains available for trading and spending on Coinbase even after being deposited with Compound. Coinbase also pays for the gas costs that come with using DeFi protocols.
Coinbase added, “DeFi has tremendous potential to help increase economic freedom, and we’re excited to be able to provide a trusted and accessible way to participate.”
Coinbase’s DeFi yield is not currently available to consumers in the United States, even though it has been rolled out to 70 nations, including significant markets such as Germany and the United Kingdom.
Earlier in September, U.S. regulators effectively ruined Coinbase’s plans to debut an interest-generating product called Lend. The SEC threatened to sue Coinbase if the exchange offered Lend, which would have let users earn a 4% return. The new product is different because Lend would have required customers to lend their crypto holdings to Coinbase, whereas, with the new one, they will lend to Compound Finance.
