Coinbase Launches DeFi Yield Services, But Not For Americans

U.S. crypto exchange giant Coinbase is expanding its services with new decentralized finance (DeFi) offerings, but they will be unavailable to North American customers.

In an announcement on Dec 9, Coinbase stated that it was launching a new DeFi service to “eligible customers” in more than 70 countries.

The DeFi yield product will only be available on MakerDAO’s DAI stablecoin at the moment. Those that are eligible will be able to earn yields on DAI directly from the Coinbase app and website, the company stated.

The Securities and Exchange Commission killed Coinbase’s plans for DeFi in the U.S. when it threatened legal action over the firm’s proposed Lend service in early September. Lend would have enabled investors to earn interest on USDC stablecoins but the regulator waved the red flag at that one.

At this week’s congressional testimony, Coinbase Chief Financial Officer Alesia Haas said “we still do not have clarity on why our product wasn’t allowed to proceed.”

DeFi yields from Compound

Coinbase will be using the DeFi lending protocol Compound Finance to generate the yields on DAI. Annual percentage yields will vary and be depended on Compound’s rates. Coinbase stated that the APY for supplying DAI fluctuated between 2.83% and 5.39% in October. At the time of writing, Compound was offering 3.33% on DAI deposits.

There was no mention of what fees or commission Coinbase would be taking from these yields, but it did say it would cover the gas fees. The company did warn that there could be potential losses, however, but this is unlikely with over-collateralization.

DeFi yields are available to users in the U.K., Germany, Spain, and many more countries. Coinbase is aiming to expand its DeFi offerings in regions that have yet to restrict or regulate these activities, stating,

Today’s launch is just the beginning — we are continuing to explore ways to allow our customers to use a wider variety of assets and a greater number of DeFi protocols.

DAI supply surges

DAI is currently the fourth-largest stablecoin by market capitalization with $8.91 billion according to CoinGecko.

Since the beginning of 2021, DAI supply has surged 2,300% hitting an all-time high of just under $9 billion earlier this week.

DAI differs from other stablecoins such as Tether, USDC, and BUSD, in that it is decentralized and backed by crypto collateral on the MakerDAO protocol.