For users in many countries around the world, Coinbase is adding decentralized finance (DeFi) investing.
The world’s most valuable crypto exchange recently announced that those holding the Dai (DAI) stablecoin can earn variable-yield interest. Coinbase says it will facilitate easy and affordable access using DeFi's yield feature.
"There is a cost associated with accessing DeFi protocols, as well as a complex user experience.”
“With just a few taps and no network fees, Coinbase makes DeFi more customer-friendly," the digital based exchange added.
A DeFi application runs on public blockchains, mainly Ethereum. DeFi tokens can also be used as a speculative investment, as well as earning interest.
Over the last year, "yield farming" has gained popularity in the DeFi crypto world. It's like the yield on a bond, or a dividend if you want to compare it to traditional investing.
Dividends on DeFi tokens fluctuate based on how these projects and exchanges roll them out, like traditional dividend-paying stocks.
Coinbase is bringing the new feature to many countries around the world with one notable exception.
“Coinbase users in over 70 countries, including the United Kingdom, Germany, and Spain, can now earn DeFi-powered yield on Dai. In the United States, DeFi Yield is not yet available.”
In accordance with the official Coinbase DeFi yield webpage, Ethereum-based DAIs are deposited into Compound's (COMP) smart contract platform, but investors continue to have access to their funds.
Coinbase further disclosed that the annual percentage yield (APY) is determined by the rates offered by Compound and that the crypto exchange cannot guarantee against possible losses.
In the future, Coinbase plans to add more assets and ways for holders to earn.