Coinbase Revives Stablecoin Bootstrap Fund to Fuel DeFi Liquidity

Cryptocurrency exchange Coinbase has launched another installment of its Stablecoin Bootstrap Fund.

The fund, announced Tuesday (Aug. 12), follows the 2019 debut of the initial fund, aimed at helping decentralized finance (DeFi) developers establish liquid marketplaces.

The new fund will be overseen by Coinbase Asset Management (CBAM), with its first placements on Aave, Morpho, Kamino and Jupiter to bolster stablecoin liquidity within their ecosystems, Coinbase said in a news release.

“As we scale the fund over time and distribute liquidity across more protocols and stablecoins, we’re particularly eager to collaborate with pre-launch teams or those seeking to drive stablecoin growth from day one,” the company said. “We believe the future of finance is onchain, and we’re excited to lead the way by putting Coinbase’s own resources to work. The Stablecoin Bootstrap Fund is another effort that reflects our commitment to fostering a thriving onchain ecosystem.”

The announcement noted that the initial fund helped seed onchain liquidity for Coinbase’s USDC stablecoin across a variety of “blue-chip DeFi protocols, such as Uniswap, Compound and dYdX, helping drive robust liquidity in the early innings of DeFi.”

Meanwhile, PYMNTS wrote late last month that Coinbase’s latest earnings “show a company treading a narrow path between innovation, compliance and resilience.”

On one hand, Coinbase enjoyed a $1.5 billion unrealized gain on strategic investments, including from its stake in Circle, along with  $362 million uplift from crypto asset holdings.

However, the platform’s core transactional revenues plunged 39% quarter-over-quarter, “reflecting softening volatility, weaker retail sentiment and deliberate changes in fee structures on stablecoin pairs,” the report said.

The company’s executives also used the earnings call to reveal it was launching prediction markets and tokenized stocks for American users in the coming months, though the biggest news was in building stablecoin payments and gaining institutional trust.

“We see payments as the next big use case in crypto, and believe that the majority of all payments in the economy will eventually run on stablecoin rails,” Coinbase CEO and Co-founder Brian Armstrong told analysts.

“One of the biggest areas we are focused on is B2B payments. We think cross-border stablecoin payments is a $40 trillion opportunity and B2B is 75% of that,” added Armstrong. “It’s better if the sender and recipient both want to use the same stablecoin and actually the same underlying payment rail.”