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You can now earn money by depositing your DAIs on Coinbase – CVBJ

By on December 11, 2021 0


Access to DeFi from Coinbase is enabled for users in Spain and other countries.

Coinbase on “guarantees” the investment to cover potential losses on the DeFi platform.

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The exchange of bitcoin (BTC) and other cryptocurrencies, Coinbase, based in the United States and offering its services in dozens of countries, is expanding its services. It now includes access to decentralized finance (DeFi) via its platform.

From this December 9, the company has implemented a tool that allows to obtain financial returns. It can access this service using DAI, decentralized stablecoin developed by MakerDAO.

The Coinbase initiative is being carried out with the Ethereum-based DeFi platform, Compound Finance, according to what was announced on the exchange’s blog. Compound specializes in loans and offers returns to those who deposit certain tokens on their smart contracts.

“Decentralized finance is becoming one of the most popular use cases for blockchains and cryptocurrencies because it allows people to access applications without the need for a centralized intermediary,” Coinbase points out.

The company recognizes that for many people, it can difficult to enter the world of DeFi, as well as they can face the high fees of Ethereum as well. “Coinbase makes DeFi more customer-friendly and accessible with just a few steps and with no network fees,” they say.

It should be clarified that unlike what happens when using the decentralized platform directly, anyone entering through Coinbase must provide their personal data and verify their identity by means of a document.

Who can access Coinbase’s DeFi returns?

Users from 70 countries are already eligible to opt for this service. According to the company’s statement, Spain is one of the authorized jurisdictions. They also mention the United Kingdom and Germany.

CriptoNoticias attempted to access Coinbase’s DeFi service from Argentina and Venezuela. It has been found that – at least for now – users in these two countries do not have access enabled. Citizens or residents of the United States cannot use this service either.

The reason that prevents US citizens from opting for the new service could be related to a threat of prosecution by the United States Securities and Exchange Commission (SEC) at Coinbase months ago. The reason for this was the launch of a lending product based on the USD Coin (USDC) stablecoin, a fact reported by CriptoNoticias.

The Coinbase exchange provides returns on the DAI stablecoin in over 70 countries, including Spain. Source: Coinbase.

How does Coinbase’s DeFi service work?

The exchange, in its alliance with the Compound platform, requires users to have DAI in their Coinbase account to access DeFi returns.

Then, automatically, the stablecoin is sent to the Compound platform where it starts earning interest.

Regarding the percentage of return, this varies according to compound rates and it will be automatically updated to reflect the changes in the market.

Currently, Compound manages an annual rate of 4.93%. Regardless, Coinbase specifies that this is variable and, for example, in October it fluctuated between 2.83% and 5.39% per year.

Coinbase warns that even if they keep the protocol under surveillance, it cannot “guarantee that there will be no potential losses.” But, in order to mitigate the risk, they hold excess assets to cover the missing funds, if any.

In addition, the company guarantees that while the stable coins are in Compound, users will be able to access the funds when they deem it necessary.

Coinbase also offers bitcoin loans

It is not the first investment and financing product offered by the Coinbase exchange. In early November, he unveiled a financial lending tool, using bitcoin as collateral, a fact that was detailed by CriptoNoticias.

This way they can be ordered borrowed up to 40% of the value of bitcoin in an account, or up to $ 1 million. In return, the exchange requires the return of an annual interest of 8% applied to the transaction.

The line of credit is only available for the United States at this time. Unlike traditional banking and financial institutions, Coinbase does not require a customer’s credit check.