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DeFi Yield

What is DeFi Yield?

DeFi Yield enables eligible Coinbase users to receive variable interest rates on their crypto-assets by depositing them into third-party DeFi protocols.

Currently, the DeFi Yield program allows Coinbase users to receive variable returns on their Dai holdings by depositing Dai in Compound, a DeFi lending protocol.

Who is eligible for DeFi Yield?

To be eligible for DeFi Yield, you must, at a minimum:

  • Reside in a country in whichDai Rewards are available; and 

  • Have a verified identity on Coinbase.

If you are eligible for DeFi Yield, you will see an option to participate in the program here:

What is DeFi?

Decentralized Finance (DeFi) refers to a variety of online financial marketplaces, called DeFi protocols, that run on blockchains. Unlike conventional financial marketplaces, DeFi protocols are not controlled by centralized entities. Instead, they are managed by decentralized software applications (dApps) that allow users to interact with them using only a cryptocurrency wallet.  As a result, DeFi protocols are trustless, permissionless, and anonymous, allowing anyone to participate. The DeFi ecosystem has grown into an online network of financial marketplaces with over $185B of funds deposited.

You can learn more about the basics of DeFi here.

What is Compound?

Compound is a DeFi lending protocol that allows anyone to loan their stablecoins and anyone to borrow them. Lenders earn yield and borrowers gain access to stablecoins without having to sell their other crypto-assets. Lenders deposit their stablecoins in a liquidity pool and borrowers can draw loans from that liquidity pool by depositing other crypto-assets, like Ether (ETH), as collateral. Lenders receive their share of borrowers’ interest payments in the form of the stablecoin that they deposited.

How much interest will I earn with DeFi Yield?

Your DeFi Yield rate on Coinbase will vary depending on market conditions. Compound pays a variable interest rate for Dai deposits depending on the amount currently available in its Dai liquidity pool. If Compound needs more Dai in its liquidity pool and wants to incentivize lenders to deposit more Dai, they will raise the interest rate. If fewer people are borrowing Dai and Compound does not need new Dai deposits, they will lower the interest rate. So, there is no way to predict exactly how much interest you will earn through DeFi on Coinbase. Historically, interest rates for Dai on Compound have ranged anywhere from 2%-10%.

Do I pay any transaction fees to use DeFi Yield?

DeFi Yield users pay a Coinbase transaction fee to deposit their Dai in the DeFi Yield program. However, DeFi Yield users are not required to pay the Ethereum transaction fees (“gas fees”) that they would otherwise be required to pay to engage with Compound.

What is the minimum/maximum amount I can deposit in DeFi Yield?

There is no minimum or maximum amount of Dai that you can deposit in the DeFi Yield program, but you must deposit all of the Dai in your Coinbase account to participate. 

For fees related to trading Dai, please visit our pricing and fees disclosure page.

Can I deposit only part of my Dai holdings into DeFi Yield?

Currently, Coinbase only supports the ability to deposit all of your Dai holdings into DeFi Yield. In the future, we plan to add the ability for users to deposit part of their Dai holdings into DeFi Yield.

How will I receive my DeFi Yield?

Your DeFi Yield will appear in your Coinbase account and will be automatically added to your Dai holdings. You will receive all of your interest in the form of Dai.

When can I withdraw my funds from DeFi Yield?

You can withdraw funds from DeFi Yield at any time.

To opt out of DeFi Yield:

  • On the web: Go to Settings and select Yield Center, then toggle the icon from “Off” to “Opt Out.”

  • On the iOS/Android Coinbase mobile app: Go to Settings and select Yield Center. From there, you can toggle the icon from “Off” to “Opt Out.” 

What are the risks of using DeFi?

Use of all DeFi protocols involves certain risks. You can read more about them here.

We do not offer insurance or otherwise guarantee your crypto-assets whilst they are deposited in any DeFi protocols. By using DeFi on Coinbase, you assume the risk that your crypto-assets may be lost, as described in the DeFi Yield section of the applicable User Agreement. 

Why does Coinbase only accept Dai deposits for DeFi Yield?

DeFi Yield will launch with Dai deposits in Compound protocol, but we plan to expand the program soon to include other tokens and DeFi protocols. For updates, please feel free to follow Coinbase on Twitter here

Can I use DeFi Yield if I don’t have any Dai?

Currently, you must have Dai to participate in DeFi Yield. If you want to participate in DeFi Yield but do not have Dai in your Coinbase account, you can acquire Dai on Coinbase by purchasing it with fiat currency or exchanging it for other crypto-assets. If you hold Dai in another account or wallet that you would like to use in DeFi Yield, you can transfer that Dai to Coinbase. You can also use Coinbase Wallet to exchange other crypto-assets for Dai.

 

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