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- Verified pools ensure that only verified users can access liquidity.
- Institutions and retail traders benefit from enhanced security and efficiency.
- Built on Uniswap v4, Coinbase’s system integrates KYC for trusted onchain trading.
Coinbase has launched Verified Pools, a feature designed to bring security and transparency to onchain liquidity. Built on the Uniswap v4 protocol, it integrates with Coinbase Verifications, a KYC-based system that ensures only verified users can supply or interact with liquidity.
This represents a shift towards decentralized finance. Liquidity pools, where the transaction takes place without intermediaries, have in the past been criticized as not being transparent enough. Coinbase plans to change that by creating a more regulated and trusted trading environment.
Users can connect their Prime Onchain Wallet, Coinbase Wallet, or third-party wallets to utilize verified pools. The service has been rolled out to the United States, Singapore, Netherlands, British Virgin Islands, Cayman Islands, and Channel Islands.
Verified Pools Ensure Secure Liquidity
Verified Pools make onchain trading easier through the integration of verification of identities with transparent smart contracts. This reduces the risks and enhances the level of trust. Uniswap v4 integration further enables custom smart contract functionalities with hooks, which in turn make trading more efficient.
Additionally, it has partnered with Gauntlet, a risk modeling company, to optimize liquidity settings, ensuring that the pools remain in a good liquidity position without causing volatility. The entire system operates on Base, Coinbase’s layer-2 solution, with lower fees and faster transactions.
Institutional investors enjoy a managed environment with strengthened security measures offered by Verified Pools. Institutions can set price limits on liquidity, increasing capital efficiency. Only verified parties are able to engage with liquidity pools, lessening counterparty risks via the system.
Institutions can integrate via API to provide liquidity directly or use the Prime Onchain Wallet for seamless interaction. This solution ensures compliance without affecting the efficiency of onchain trading.
Simplifying Onchain Trading for All
Retail traders often find onchain liquidity pools complex. Verified Pools aim to simplify this. By connecting a Coinbase Wallet, users can trade directly with pools, eliminating intermediaries and ensuring access to verified liquidity.
Traders can securely and efficiently make their transactions using this system. The verification system adds an additional security, making the process of trading more secure for the average user. Opening more users up to onchain trading, Coinbase minimizes the hurdles.
Verified Pools enable direct trading with the liquidity pools, without the intermediaries and the redundant steps that come with it. In providing verified liquidity, the system increases the security of the transaction and minimizes the risks that come with unverified participants.
Traders fully own their assets, their keys, and their trades without relying on intermediaries, and more importantly, this innovation speaks volumes about Coinbase’s focus on building the onchain ecosystem through the development of a secure, transparent, and efficient trading system. Furthermore, Coinbase’s Verified Pools redefine the means through which liquidity is acquired, effectively bridging the gap between decentralization and compliance.
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