Coinbase Deposited $1.1 Million Into DeFi Applications

Coinbase deposited $1.1 million into Defi applications on Ethereum Uniswap and PoolTogether in their pools which are among the most popular applications. The investment comes thanks to the USDC Bootstrap Fund which was launched back in 2019 as we are reading further in the crypto news.

Coinbase wrote in the blog post:

“With USDC, we hope to provide critical infrastructure that will enable DeFi to grow and increasingly compete with existing financial products.’’

DeFi platforms such as dYdX were on the Bootstrap Fund’s initial investments. The latest move by Coinbase is another vote of confidence in the DeFi system just as the sector will finally use it. There was $1 billion worth of Ether that was locked in multiple Defi applications but that is a decrease to $629 million as of this writing. The leading platform of the sector MakerDAO suffered a huge crash earlier this month which was when the coronavirus fears crashed the crypto markets. Coinbase deposited the funding for Uniswap and PoolTogether is important because there aren’t so many investments in the companies but these deposits will make them increase their liquidity and will make them work.

Coinbase deposited million into the USDC/ETH pools on Uniswap and once the pools get bigger, the app will work better as well.
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The founder Hayden Adams explained:

“It provides a significant improvement to prices on that pool. The pool can support larger trade sizes and more volume.’’

The Uniswap works by simply matching up pools where the ERC-20 tokens that are paired with an equal amount of value in ETH so the users trade one token for ETH and this token for the other token with the user never touching the price of the coin in the middle. The amount of funds in the pool expands the bandwidth of any ERC-20 token. The smaller pools are quite easy to get out of the line with the bigger market. The bigger pools are less likely to get out of line which means other apps will be integrated and a ‘’larger percentage of these price-sensitive trades are more likely to be executed over Uniswap compared to other liquidity sources’’ according to Adams:

“Uniswap is extensively used for liquidations and arbitrage in DeFi, and liquid exchanges are a critical building block to decentralized finance.’’