The leading US cryptocurrency exchange – Coinbase – introduced a product that enables users to deposit Dai (a stablecoin pegged to the American dollar) and earn DeFi yield. The feature is available for customers in over 70 countries, including the United Kingdom, Germany, and Spain, and requires no fees. However, the service is not currently available for Americans.
Coinbase Enters The DeFi Space
The trading venue announced the news via a blog post on its official website. The team praised Decentralized Finance as a sector with many use cases for blockchain technology and cryptocurrencies. It allows people to access digital asset applications without the need for a centralized intermediary, the company noted.
Nonetheless, DeFi protocols often require expensive network fees and an appropriate user experience. With that said, Coinbase aims to make DeFi more accessible for its global clients:
“Eligible users will now be able to access the attractive yields of DeFi from the comfort of their Coinbase account with just a few taps and without the network fees,” the company revealed.
Starting from December 9, customers are able to earn DeFi yield on Dai. The Dai amount will then be deposited into Compound Finance (a DeFi marketplace used by crypto investors to lend and borrow digital assets).
The offered Annual Percentage Yield (APY) varies according to the rates from Compound. During the month of October, for example, it fluctuated between 2.83% and 5.39%.
Coinbase warned that these higher rates cause increased risks when dealing with DeFi. While the company assured that it monitors the process carefully, potential losses are still possible.
The trading venue informed that even when deposited with Compound, Dai remains available to customers at all times, meaning they can trade as usual. Coinbase also covers the gas fees, which are usually required to access DeFi protocols.
The firm concluded that this feature is “just the beginning,” assuring that it will provide more DeFi opportunities for its users in the future:
“Today’s launch is just the beginning — we are continuing to explore ways to allow our customers to use a wider variety of assets and a greater number of DeFi protocols.”
Coinbase and The Pressure From the SEC
A few months ago, the US-based cryptocurrency platform revealed intentions to launch a USDC APY lending program only in the States. Coinbase also encouraged users to pre-enroll for the program, which attracted hundreds of thousands of customers.
However, at the end of September, the team withdrew its plans to introduce the service, citing regulatory issues with the US Securities and Exchange Commission as a reason:
“Our goal is to create great products for our customers and to advance our mission to increase economic freedom in the world,” reads the update. “As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program announced below.”
Featured Image Courtesy of Coinbase