Coinbase Takes a Bold Step into the Future of Decentralized Finance with the Launch of Verified Pools

Coinbase is taking a bold step into the future of decentralized finance (DeFi) with the launch of Verified Pools, a groundbreaking service that promises to bridge the gap between traditional finance and the burgeoning world of onchain trading. By integrating robust KYC (Know Your Customer) verification with smart contract transparency, Verified Pools aim to solve the trust deficit that has hampered institutional adoption of DeFi.

Coinbase is venturing into the realm of decentralized finance (DeFi) with its new service, Verified Pools, which aims to integrate the trustworthiness of traditional finance with the innovative spirit of onchain trading.

The company is introducing a unique take on liquidity pools, designed to be transparent, efficient, and trusted by both institutional and retail users. It is a initiative that has the potential to reshape the DeFi landscape and broaden participation in the decentralized economy.

Trustless and Transparent: Overcoming Key Challenges in DeFi

DeFi has gained recognition for its potential to democratize financial services, providing diverse methods for trading and investing in digital assets without the need for intermediaries.

However, the traditional DeFi landscape often presents a challenge with respect to ascertaining the identities and trustworthiness of participants, especially for institutions who are sensitive to counterparty risk.

“Liquidity pools have traditionally been opaque,” Coinbase explained. “It hasn’t always been clear who is providing funds, leading to potential risks.”

To mitigate this risk, Verified Pools are designed to integrate Coinbase’s robust KYC (Know Your Customer) verification system, known as Coinbase Verifications, with the transparency of smart contracts.

How Verified Pools Work

Users in the U.S., Singapore, Netherlands, British Virgin Islands, Cayman Islands, and Channel Islands can connect their Prime Onchain Wallet, Coinbase Wallet, or other third-party wallets to Verified Pools using the Coinbase Verification credential. This credential acts as a “trusted badge” within the onchain ecosystem.

This integration of identity verification with smart contract transparency is what sets Verified Pools apart. By ensuring that all participants are verified, Coinbase significantly reduces counterparty risk, fosters trust, and helps to maintain the integrity of the onchain market.

The platform is built on Uniswap v4, one of the leading DEX protocols, and leverages its “hooks” feature for customized smart contract functionality. Coinbase has also partnered with Gauntlet, a risk modeling and economic optimization firm, to ensure optimal liquidity pool configurations and overall health.

How Do Verified Pools Benefit Institutional Onchain Transactions?

For institutional investors, who have long sought a secure and compliant way to engage in onchain trading, Verified Pools offer a compelling solution.

Connecting through Prime Onchain Wallet provides institutions with the opportunity to access the benefits of DeFi while maintaining the security and controls they expect.

How Do Verified Pools Democratize Onchain Trading for Retail Users?

Verified Pools isn’t just for institutions; it’s also designed to make onchain trading accessible and intuitive for everyday retail traders. By connecting to Verified Pools with Coinbase Wallet, users can:

Verified Pools Are Powered by Base: Scalability and Efficiency

To ensure smooth and cost-effective transactions, Verified Pools is built on Base, Coinbase’s scalable layer-2 network for Ethereum.

Base aims to improve transaction speed and reduce fees, making onchain trading more attractive to a wider audience. This means that both institutional and retail traders can benefit from the inherent advantages of DeFi without being hampered by high costs or slow transaction times.

More News: Coinbase Introduces 24/7 Bitcoin and Ethereum Futures for US Traders

Verified Pools Launch Context: Direct Competition Between Coinbase, Binance, and Uniswarner handles the integration of DeFi liquidity pools with a robust Know Your Customer (KYC) system.

The initiative is part of Coinbase’s broader strategy to adapt to the evolving regulatory landscape and provide institutional clients with a compliant and efficient trading experience.

This initiative is not happening in a vacuum. Coinbase plans to launch round-the-clock Bitcoin and Ethereum futures trading through its derivatives exchange “in the coming weeks,” indicating a comprehensive effort to expand its offerings and cater to the growing demand for institutional-grade crypto trading solutions.