decrypt.co
Coinbase issued an open call to developers to experiment with a variety of unconventional DeFi applications on its layer-2 network Base.
Selected teams will receive a grant from the Base Ecosystem Fund and strategic assistance from the Coinbase team.
Base is the crypto exchange’s Ethereum-centric scaling solution. Announced in February 2023, the layer-2 network draws from the Optimism tech stack, another rollup-based scaling product for Ethereum.
Coinbase’s notice specifically highlighted a call to develop stablecoins that are not necessarily pegged to the dollar, pointing to projects like Olympus DAO, Reflexer, and Frax Finance.
Frax’s FPI stablecoin, for example, is pegged to a basket of real-world consumer items as defined by the U.S. Consumer Price Inflation (CPI) average.
Coinbase called this particular design a flatcoin.
The FPI token returns equivalent yields to the 12-month inflation rate in the U.S. by generating returns proportional to the CPI. According to CoinGecko, the current market capitalization of FPI is around $82 million.
The Frax Finance founder Sam Kazemain wrote in the project’s Telegram that “someone should tell them we’re up for” building the FPI stablecoin on Base.
Similarly, Reflexer’s Ameen Soleimani told Decrypt that, "Reflexer is open to working with a number of ETH L2s to explore bringing RAI's technology to new chains, especially Base."
Reflexer’s RAI is a floating-pegged stablecoin backed by ETH, whose market price depends on the supply and demand for RAI and ETH, and a price stabilization mechanism. The total ETH deposits on Reflexer to mint RAI are worth around $30 million.
Additionally, Olympus DAO, which led the wave of innovative DeFi platforms in the second half of 2021, popularly referred to as DeFi 2.0, is also in talks with Coinbase.
Olympus DAO contributor Wartull told Decrypt, “we are currently investigating the options and are in contact with the Coinbase team. They are pretty overwhelmed right now but we will explore together if it makes sense for us to deploy on Base.”
Wartull appreciated Coinbase for recognizing “the need for an unpegged flatcoin” after the recent fallout of global banks and the depegging of Circle’s USDC.
They said, “the fact they recognize Olympus as one of those projects is further validation of this.”
Unpacking Coinbase’s developer call
Besides inflation-resistant stablecoins, the letter also mentioned social applications to help users build their on-chain reputation as well as improve crypto security.
Building a Limit Order Book (LOB) exchange was also on the menu. While AMM-styled exchanges such as Uniswap continue to dominate the decentralized market, there will likely be an eventual need for order-book designs for higher performance and faster execution.
An order book-styled exchange mimics the design and performance of centralized exchanges with security guarantees.
After that short list of ideas, the exchange insisted that developers shouldn’t feel pigeon-holed by these suggestions.
By issuing a call to unconventional application developers, Coinbase is ramping up its efforts to gain on-chain dominance through its layer-2 blockchain.
Wartull of Olympus DAO added, “Coinbase has unique access to millions of retail users who currently do not have (much) DeFi exposure and this could change with the approach Coinbase is taking for their Layer-2.”