Coinbase is urging developers to design stablecoins that align with inflation metrics on its new Base network.
The widely-used cryptocurrency exchange, Coinbase, is calling on developers to create inflation-tracking stablecoins on its innovative Base network. This initiative is part of a broader effort by Coinbase to enhance and revolutionize the decentralized finance (DeFi) landscape.
Coinbase has pinpointed four primary focal points for developers to explore on Base: an inflation-adjusting stablecoin, an on-chain reputation framework, an on-chain limit order book exchange, and enhanced safety tools for DeFi users.
In light of the prevailing economic conditions, Coinbase asserts that an inflation-adjusting stablecoin is crucial. The exchange points out that existing financial systems induce economic instability, and stablecoins tied to inflation rates could help maintain purchasing stability and offer resilience against market uncertainties. Unlike conventional stablecoins anchored to assets like the US dollar, inflation-linked stablecoins, also referred to as “flatcoins,” aim to reflect living costs by monitoring consumer price indices and inflation metrics.
Furthermore, Coinbase is encouraging developers to build an on-chain reputation system designed to foster user trust. This could resemble a credit scoring model or similar system that ensures certain standards are met before allowing on-chain identities to engage with DeFi platforms. Such a system might implement ratings or reviews for merchants and could involve reputation scores assigned to ENS names. However, Coinbase stresses that any reputation mechanism must uphold user privacy and sovereignty.
Alongside the inflation-adjusting stablecoin and on-chain reputation system, Coinbase is advocating for the development of an on-chain limit order book exchange, which would mitigate counterparty risks through self-custody. This would enable institutional and professional traders to leverage familiar trading strategies from traditional finance while capitalizing on Base’s rapid transaction capabilities to devise innovative mechanisms for spot trading, limit orders, options, perpetuals, and other trading configurations.
Lastly, Coinbase is seeking to enhance user and developer safety in DeFi by encouraging the creation of tools to guard against smart contract vulnerabilities and logical errors within protocols. The exchange envisions that incorporating self-service security testing tools, more robust auditing services, and insurance protocols could significantly alleviate systemic risks.
To support early-stage initiatives on Base, Coinbase has introduced its Base Ecosystem Fund. The layer-2 network currently accommodates over 30 blockchain platforms, as highlighted in a recent Base announcement. By centering on these four critical innovation avenues, Coinbase aims to fortify the DeFi ecosystem, making it more secure, inclusive, and accessible for all participants.
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