Ahead of Direct Listing Coinbase Joins DeFi Alliance to Support Decentralized Financial Startups

UTC by Steve Muchoki · 3 min read
Ahead of Direct Listing Coinbase Joins DeFi Alliance to Support Decentralized Financial Startups
Photo: Coinbase / Facebook

Coinbase has already made considerable investments in some of the decentralized financial projects including Dharma. 

Cryptocurrency exchange Coinbase has joined DeFi Alliance, an open association that supports decentralized financial startups. Coinbase has shown interest in the decentralized financial ecosystem ahead of its public listing set for April 14.

“Coinbase has been hugely influential in growing the adoption of crypto globally,” DeFi Alliance partner Jacob Franek told CoinDesk via email. “We share the same mission of creating an open financial system and see DeFi playing a critical role so it was natural to want to work together to educate and support DeFi startups and institutions.”

During an earnings call earlier this week, Coinbase CEO Brian Armstrong noted that the decentralized financial ecosystem will be a key aspect as the company steers forward to the public market. Having successfully ventured into the cryptocurrency trading market, Coinbase seeks to diversify into other crypto-related opportunities with its high market valuation.

Notably, Coinbase is currently valued at approximately $68 billion, thus making its public listing one of the most valuable in the past few months. The cryptocurrency firm collects most of its revenue from transaction fees charged to customers purchasing and selling digital assets.

At this point, Coinbase has not announced any financial commitment to the DeFi Alliance, according to Coinbase spokesperson.

Coinbase and the DeFi Market

Previously, Coinbase has made a considerable investment in some of the decentralized financial projects including Dharma.

The DeFi Alliance was formed by a group of experienced trading firms from Chicago. Some of the members include CMT Digital, TD Ameritrade, Cumberland, DV Trading and Jump Capital, Volt Capital, and the DeFi startup Compound.

The alliance joined forces to offer advisory services to select decentralized financial platforms. In exchange, the Defi alliance can identify startups that are willing to partner and receive financial assistance to boost their operations.

“We’re very early in DeFi. I think there’s going to be a lot of hand-holding with some of these companies before they [DeFi contracts] become decentralized,” said Volt Capital co-founder Imran Khan. “Right now everyone is just dogfooding their own products. The goal for us, as the CDA, is to help us get out of that cycle.”

The decentralized financial ecosystem has grown tremendously in the past year to a billion-dollar industry. According to metrics provided by DeFi Pulse, the total value locked in the decentralized financial ecosystem sums up to approximately $51.42 billion.

Among the top decentralized financial platforms include CompoundAave, and Uniswap that controls $9.68B, $5.74B, and $5.71B respectively. Institutional investors have proliferated into the decentralized financial ecosystem to tap on its vast opportunities.

Fueled by the covid crisis, decentralized financial ecosystems including decentralized exchanges have gained momentum over centralized exchanges.

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