Coinbase Launches Second Stablecoin Fund to Deploy USDC and Enhance DeFi Liquidity

Coinbase Launches Second Stablecoin Bootstrap Fund After Nearly Six Years

US cryptocurrency exchange Coinbase has launched its second “Stablecoin Bootstrap Fund” to enhance the liquidity of stablecoins within decentralized finance (DeFi) protocols, nearly six years after the first fund. Initially, the capital will be deployed in protocols such as Aave, Morpho, Kamino, and Jupiter.

The asset management division of Coinbase will be responsible for managing this liquidity program, aiming to expand the usage channels for stablecoins and ensure the stability of interest rates within DeFi protocols. Coinbase’s Chief Business Officer, Shan Aggarwal, stated to the media:

“This means deploying funds into on-chain protocols to ensure there is adequate capital support for their specific use cases, such as lending liquidity in borrowing protocols.”

Aggarwal did not disclose the size of the fund but mentioned that it would primarily use USDC and EURC issued by Circle as liquidity assets, with potential expansion to other stablecoins in the future.

This initiative is a continuation of Coinbase’s first bootstrap fund launched in 2019. The first fund injected liquidity into USDC for protocols such as Uniswap, Compound, and dYdX, initially deploying $1 million each in Compound and dYdX, and later expanding to Uniswap and PoolTogether with investments of $1.1 million each in 2020. These early funds helped establish USDC’s core position in the DeFi ecosystem successfully.

Today, USDC is widely utilized across multiple ecosystems on chains such as Ethereum, Base, Solana, Hyperliquid, Sui, and Aptos. Coinbase stated that the new fund is part of a broader strategy to drive more assets on-chain and accelerate the adoption of stablecoins.

Regarding the timing of the launch of the second fund, Shan Aggarwal remarked:

“We are at a critical inflection point in the adoption of on-chain financial services. We saw the first fund succeed in driving the early waves of stablecoin liquidity, so we hope to leverage Coinbase’s resources to accelerate the current market interest and adoption trends.”

As one of the largest centralized exchanges in the United States, Coinbase has been continuously strengthening its expansion into the DeFi space. Last week, the company announced plans to integrate a decentralized exchange (DEX) that will allow traders to access “millions” of digital assets that were previously unavailable on its platform. This move comes at a time when Coinbase’s spot trading volume and revenue have declined in the second quarter.

Additionally, Coinbase expressed its desire to position itself as a “one-stop exchange,” offering diversified trading services including tokenized stocks, prediction markets, and early token sales.