Coinbase Launches Verified Pools for Secure On-Chain Trading

Coinbase has introduced a new liquidity solution called Verified Pools, designed to enhance the security and transparency of on-chain trading for both institutional and retail users. This feature, announced on March 18, aims to mitigate counterparty risks while maintaining decentralization by integrating identity verification with liquidity pools. Decentralized finance (DeFi) has enabled users to trade assets without intermediaries, but the anonymity of fund providers has often posed risks to liquidity pools.

To address this issue, Verified Pools requires users to link their Coinbase Wallet, Prime Onchain Wallet, or third-party wallets using a Coinbase Verifications credential. This additional layer of trust ensures that liquidity providers are verified, thereby enhancing the security of on-chain transactions. The platform is built on the Uniswap (UNI) v4 protocol, utilizing “hooks” to enable advanced smart contract functionality. This allows for customized trading features and has partnered with Gauntlet to optimize the health of the liquidity pool.

Transactions on Verified Pools occur on Base, Coinbase’s layer-2 network, which helps reduce costs and improve transaction speed. Currently, Verified Pools is available in the U.S., Singapore, the Netherlands, the British Virgin Islands, the Cayman Islands, and the Channel Islands. For institutions, Verified Pools offers concentrated liquidity and controlled access, ensuring that only verified users can supply or trade assets. Institutions can communicate through APIs or Prime Onchain Wallet for a safer trading environment.

Retail traders can also benefit from Verified Pools by engaging in direct, intermediary-free trading with verified liquidity. Users can transact while maintaining complete control over their assets by linking a wallet. The launch of Verified Pools coincides with a period of renewed interest in Coinbase, as recent regulatory changes and pro-crypto initiatives have raised hopes for the industry’s future. As Coinbase continues to expand its on-chain ecosystem, it is well-positioned to capitalize on these developments and solidify its leadership in the crypto infrastructure space.