Coinbase Global Inc. (COIN) Launches Verified Pools, a New Initiative Designed to Improve Transparency and Security in DeFi

The move comes amid growing scrutiny of risks associated with DeFi platforms, particularly regarding opaque liquidity sources and counterparty risks.

Coinbase Global Inc (NASDAQ:COIN) has launched Verified Pools, a new initiative focused on enhancing transparency and security within decentralized finance (DeFi) liquidity pools.

What Happened: The initiative, which is available to users in the U.S., Singapore, the Netherlands, British Virgin Islands, Cayman Islands, and Channel Islands, introduces a verification system that integrates identity checks through Coinbase Verifications.

The aim is to reduce the ambiguity surrounding who is contributing to these pools, a common concern within DeFi ecosystems.

Verified Pools leverages the Uniswap v4 protocol and operates on Coinbase's Base layer-2 network, known for its efficiency in reducing transaction fees and improving transaction speeds.

To optimize the liquidity pool configurations, Coinbase has partnered with risk modeling firm Gauntlet.

For institutional participants, Verified Pools provides features such as concentrated liquidity strategies, restricted access via verified credentials, and non-custodial asset management through Coinbase's Prime Onchain Wallet. Institutions can also connect via API for liquidity provisioning.

Retail users are provided with simplified access to liquidity pools through Coinbase Wallet, enabling them to interact directly with pools and choose from verified liquidity sources to minimize potential risks.

Users retain full control over their assets while participating in onchain trading.

"Verified Pools is the next step in Coinbase's commitment to advancing the onchain ecosystem," the company stated, adding that it has plans to expand further, although no specific schedule has been set.

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Verified Pools enters a competitive market where DeFi participants already have access to a variety of liquidity solutions on decentralized exchanges.

Coinbase's approach highlights the increasing emphasis on incorporating identity verification into DeFi protocols, responding to both regulators and users who are demanding higher security and transparency standards.

Coinbase's foray into Verified Pools aligns with its broader strategy to expand onchain adoption. The company is known for its cryptocurrency exchange platform, but it has been branching out into new areas such as DeFi and Web3 technologies.

The company did not disclose immediate plans for additional features or a potential rollout in new markets. It hinted at future developments depending on user demand and varying regulatory requirements across different regions.