Coinbase invests in emerging DeFi ecosystem with $2M USDC fund

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Coinbase invests in emerging DeFi ecosystem with $2M USDC fund

Global crypto exchange giant Coinbase has announced a new fund to invest in the decentralized finance (DeFi) ecosystem. The USDC Bootstrap Fund will be backed up by the stablecoin the firm launched in 2018 with partners at Circle.

According to a company blog post yesterday, Coinbase aims to encourage growth in DeFi by channeling funds into the development of decentralized finance protocols.

To begin it will contribute 1 million USDC each to the development of the Compound and dYdX DeFi protocols.

Next stage in the evolution of crypto assets

DeFi is essentially a movement that leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries.

It is the next stage in the evolution of crypto assets and their integration into traditional finance markets.

Coinbase clearly wants to be a part of this movement but also has the desire to expand the adoption of its own stablecoin, which is almost ten times smaller than rival Tether in terms of market capitalization.

Coinbase USDC

The announcement added:

“In our talks with countless developers, we consistently heard how hard it was to get liquidity for a new DeFi protocol. With the Bootstrap Fund, we aim to make it easier for developers to launch their protocol and help them to create healthy, liquid marketplaces by leveraging USDC.”

It also stated that the Fund was separate from Coinbase Ventures, which invests in select crypto startups.

According to its website, Compound is an open-source, autonomous money market protocol built for developers to leverage crypto staking and lending which generates interest.

The dYdX protocol meanwhile relies on smart contracts to govern the trading, borrowing, and lending of crypto assets on its platform.

According to USDC Bootstrap Fund lead Nemil Dalal, DeFi is still a tiny fraction of the global banking system but is one that the company wants to track and help mature.

“The biggest concern in general is that DeFi is a tiny portion of the world of banking and financial transactions,” Dalal said.

“So the biggest thing for us is that we want to help grow Decentralized Finance… The only number we are tracking is the growth of DeFi and what USDC and Coinbase can do to encourage that.”

Major players taking notice of DeFi industry

Major players taking notice of DeFi industry

At the moment, DeFi is dominated by DAI and MakerDAO which uses a dollar-pegged and asset-backed stablecoin to manage a crypto credit facility that can issue loans at certain interest rates.

The fledgling industry is growing with even the likes of NASDAQ paying attention.

As reported by Micky, a new decentralized finance index has been added to the platform.

Nasdaq added that the DeFiX is the first altcoin index that reflects the dynamics of the most promising blockchain projects working in decentralized finance.

Initially, it will cover Augur, Gnosis, Amoveo, Numerai, Maker, and 0x.

With bigger names taking a longer look at DeFi, the industry could get the boost it needs to become the disruptive technology that it was designed to be.