Coinbase facilitates DeFi funding via USDC amid $40.7B active loan record

Coinbase launched a second Stablecoin Bootstrap Fund to provide additional liquidity for the DeFi ecosystem via USDC.

According to an Aug. 12 announcement, the initiative will target protocols across multiple blockchains, starting with Aave, Morpho, Kamino, and Jupiter. Coinbase also invited protocols seeking liquidity to reach out to the exchange. 

The fund represents Coinbase’s renewed commitment to accelerating stablecoin adoption across mature and emerging protocols after its original 2019 Bootstrap Fund.

Time for growth

Coinbase’s first Bootstrap Fund helped establish marketplaces for USDC across blue-chip DeFi protocols such as Uniswap, Compound, and dYdX during the early stages of DeFi development.

Notably, USDC has become the leading stablecoin in DeFi with an estimated $8.9 billion in total value locked (TVL) and $2.7 trillion in annual on-chain transaction volume.

A Coinbase spokesperson explained in a note that the timing reflects current market conditions and growth opportunities:

“We’re at an inflection in adoption of onchain financial services. We saw how successful the first fund was in helping drive the initial wave of onchain stablecoin liquidity, and saw an opportunity to leverage Coinbase’s resources to further accelerate the interest and adoption that we’re seeing today.”

The record-breaking $40.7 billion in active DeFi loans represents one factor motivating the fund’s launch.

However, the spokesperson noted crypto-backed loans constitute “a prime example of this adoption and ongoing growth, but not the only reason” for the initiative.

The fund seeks to ensure deeper liquidity for stablecoins across the on-chain ecosystem, enabling users to access reliable rates across both established and emerging protocols.

Scaling over time

Coinbase plans to scale the fund over time and distribute liquidity across additional protocols and stablecoins beyond the initial four recipients. The launch can have a direct and positive impact on USDC usage in DeFi.

Adding more liquidity to the largest decentralized money markets will decrease the borrow rate for USDC on those venues, potentially making the stablecoin more interesting for on-chain leverage. The fund could also bring more money on-chain.

Lastly, the company expressed particular interest in collaborating with pre-launch teams or projects seeking to drive stablecoin growth from inception. 

The spokesperson concluded:

“We believe now is the time to build, and the Stablecoin Bootstrap Fund is here to inject liquidity in projects that can make an impact on the ecosystem no matter the size.”

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