Coinbase Launches Verified Pools to Bridge Traditional Finance and DeFi

Coinbase has introduced Verified Pools, a new service aimed at bridging the gap between traditional finance and decentralized finance (DeFi). This innovative platform offers a secure and transparent way to access onchain liquidity, designed to appeal to both institutional and retail traders. The service is built on Coinbase’s robust KYC (Know Your Customer) verification system, which ensures that all participants are verified, thereby reducing counterparty risks and fostering trust within the onchain ecosystem.

Verified Pools address a longstanding issue in the DeFi landscape: the lack of transparency regarding the identities and trustworthiness of participants. By integrating identity verification with smart contract transparency, Coinbase aims to create a more secure and compliant environment for onchain trading. The platform is constructed on Uniswap v4, a leading DEX protocol, and utilizes its “hooks” feature for customized smart contract functionality. Additionally, Coinbase has partnered with Gauntlet, a risk modeling and economic optimization firm, to ensure optimal liquidity pool configurations and overall health.

For institutional investors, Verified Pools provide a secure and compliant way to engage in onchain trading. Institutions can connect through Prime Onchain Wallet, allowing them to access the benefits of DeFi while maintaining the security and controls they expect. Key features include concentrated liquidity, controlled access, and autonomy, ensuring that institutions retain full control and ownership of their assets. Retail users also benefit from Verified Pools, as they can trade directly with pools, eliminating intermediaries and ensuring safer and more efficient transactions. The non-custodial nature of the platform means that users retain control of their assets, aligning with the principle of “your keys, your trades.”

Verified Pools is powered by Base, Coinbase’s scalable layer-2 network for Ethereum. This infrastructure aims to improve transaction speed and reduce fees, making onchain trading more attractive to a wider audience. By leveraging Base, both institutional and retail traders can benefit from the advantages of DeFi without being hindered by high costs or slow transaction times. This launch positions Coinbase as a direct competitor to established players in the DeFi space, such as Uniswap and Binance, by offering a more secure and compliant trading environment.

The introduction of Verified Pools 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, along with the planned launch of round-the-clock Bitcoin and Ethereum futures trading through its derivatives exchange, indicates a comprehensive effort to expand its offerings and cater to the growing demand for institutional-grade crypto trading solutions. By focusing on transparency, security, and compliance, Coinbase aims to attract a wider range of participants to the DeFi ecosystem, promoting greater onchain adoption and liquidity.