Coinbase to Invest $2 Million USDC in DeFis Compound and dYdX

Announced Tuesday, the US cryptocurrency exchange is investing 1 million USDC each in lending protocols Compound and dYdX. Called the "USDC Bootstrap Fund," Coinbase says the new fund will support developers by "Investing USDC directly in the protocol."

USDC is a dollar-pegged stablecoin launched last year by Coinbase in partnership with crypto finance startup Circle.

According to data from Etherscan, there are currently $443 million USDC tokens in circulation.

The move differs in important ways from the typical investments made by Coinbase Ventures, according to Coinbase product manager Nemil Dalal.

Doing so is mutually beneficial for both Coinbase and the participating DeFi platforms, according to dYdX Head of Operations Zhuoxun Yin.

Compound CEO Robert Leshner added that the USDC Bootstrap Fund can also be seen as "The starting point for the legitimization of open finance."

Other DeFi applications that want to integrate USDC for the first time or increase the asset's liquidity on their platforms are encouraged to apply for the USDC Bootstrap Fund through an online form.

Yin said the Coinbase due diligence team did a thorough investigation of the dYdX code before committing to the $1 million USDC investment.

That said, there is some immediate upside for Coinbase in investing USDC tokens on both Compound and dYdX: returns are promised to all users of these DeFi applications - including Coinbase.

The current interest rates on USDC accounts are 5.03 percent and 5.35 percent on Compound and dYdX, respectively.