San Francisco-based cryptocurrency exchange Coinbase is expanding its horizons toward the realm of banking in a bid to further evolve into a one-stop hub for new kinds of finance.
That’s because on October 2nd the unicorn startup unveiled a new rewards program that will award annual earnings to customers who hold the USD Coin (USDC) stablecoin on the exchange.
Dubbed USDC Rewards, the program will offer users 1.25% APY for each USDC they deposit on Coinbase. The dollar-pegged stablecoin itself is backed by CENTRE, the cryptocurrency consortium founded by Coinbase and Poloniex-owners Circle.
“As crypto adoption continues to spread, it’s our goal to deliver more ways for anyone to legally and securely do more with their crypto, beyond trading,” Coinbase said.
The exchange first added support for USDC, an Ethereum token based on the ERC20 standard, last fall. Since then, the firm has been steadily exploring more ways to grow the utility and clout of the token.
Back in June, the CENTRE consortium declared it was opening up the CENTRE Network, the software-based governance framework for the organization, to newcomers. Those who make it in are allowed to issue and redeem USDC. The amount of USDC issued crossed over the $1 billion mark for the first time in August.
Moreover, last month Coinbase invested $1 million in USDC in cryptocurrency lending dApps Compound and dYdX, respectively. Hailed as the “USDC Bootstrap Fund,” the exchange placed the investments directly into the protocol’s to improve liquidity.
“We view this as just one first step for how Coinbase will support DeFi,” the exchange said at the time.
From DeFi to OpFi
Decentralized Finance or Open Finance?
Just about everyone in the Ethereum community has their personal preference for what to call the permissionless possibilities that Ethereum’s building blocks are making possible, yet there can be subtle differentiation between the two terms.
That’s per DTC Capital co-founder Spencer Noon, who, in commenting on the USDC Rewards news, said the development was an instance of how “something can be Open Finance but not DeFi,” as “OpFi isn’t necessarily decentralized but it still leverages [crypto] primitives.”
Woah! This came out of nowhere @Coinbase.
🌎 – Massive onboarding potential for Open Finance. CB leading millions down the ETH rabbit hole
💡- Great example of how something can be Open Finance but not DeFi. OpFi isn't necessarily decentralized but it still leverages primitives https://t.co/w06krg23zQ
— Spencer Noon (@spencernoon) October 2, 2019
Indeed, the “decentralize everything totally at any cost” mindset found in some corners of the cryptoverse isn’t practical or needed for many things in society. With that said, Open Finance can let traditional institutions and upstarts alike update and streamline certain activities — or at least point the way to doing so later — courtesy of public, neutral, decentralized infrastructure like Ethereum.
Another fledgling example of OpFi that’s freshly making the rounds is the news that IKEA Iceland just settled an invoice with one of its retailers via Ethereum using a digitized Icelandic króna created by Monerium, a startup which counts Ethereum venture studio ConsenSys among its investors.
“As the first company authorized to issue e-money on blockchains, we are delighted to demonstrate the benefits of blockchains for mainstream B2B transactions using a legal form of digital money,” Monerium co-founder and CEO Sveinn Valfells said of the milestone.
Another Revenue Sharing Project Appears
Another new wrinkle on the stablecoin front appeared this week, as a group of employees who previously worked at large firms like Intel and JP Morgan have launched a new kind of dollar-pegged token.
Specifically, these employees have created their own company, the Global Currency Organization (GCO), and the first order of business was unveiling the firm’s new stablecoin, the USD Digital (USDD) token.
What makes the ERC20 unique is that it deploys a revenue sharing model for organizations that make use of the token, like exchanges and wallet services. GCO said it will share 50 percent of the revenue generated from the token’s underlying deposits with these participants.