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Coinbase Grants App Users Direct Access to Crypto Lending Platforms

Last updated: | 2 min read

Major crypto exchange Coinbase has announced that it will allow users to lend out their crypto and gain interest from loans using decentralized finance (DeFi) apps via its Coinbase Wallet app.

Source: Adobe/prima91

The development comes as the crypto lending industry continues on a path of dynamic growth, with rapidly increasing interest among would-be lenders worldwide.

In a statement, the exchange wrote,

“Coinbase Wallet users have already deposited millions of dollars into DeFi apps like Compound and dYdX, earning interest at rates ranging up to 6% [annual percentage rate]. Users currently access these apps through the Wallet’s built-in decentralized application (dapp) browser or via WalletLink on desktop. However, it isn’t easy to compare rates or view total balances across different providers.”

Coinbase added that its latest move would “make it even easier” for customers to use DeFi apps by “integrating them” into its “wallet experience.”

DeFi borrowing and lending apps typically involve making use of smart contracts, or programs that run on the Ethereum blockchain, backed by collateral from borrowers.

These borrowers are required to lock up a certain amount of crypto holdings on the blockchain network in order to borrow tokens from a would-be lender.

Last year saw a major surge in crypto lending worldwide.

A recent report compiled by crypto finance company Credmark found that that in the fourth quarter of 2019 there was a 51.7% quarterly increase in the value of the global crypto lending industry. Between October and December 2019, active debt stood at USD 1.568 billion, USD 1.441 billion of which was private debt. USD 129 million of the total was generated by DeFi lenders.

The total value of global crypto loans expanded to USD 8 billion last year, a sevenfold increase on 2018 figures.

Credmark says its figures are based on public data released by DeFi lenders and private data from consumer and institutional lenders – representing an estimated 85% of the market.

The report’s authors stated that early 2019 saw the emergence of new DeFi protocols and new private lenders.

They added,

“Simultaneously, new products were introduced by existing players. Many of these products matured during the second half of the year. Q2 growth was fueled by new entrants, while Q4 growth was fueled by increased institutional lending and recovering crypto prices.”

The company added that the entry of new players, such as LendingBlock, Ledn and Bankera has also galvanized the industry, as have new products by established DeFi companies such as Nexo and BlockFi.