San Francisco-based cryptocurrency exchange and wallet provider, Coinbase, has recently announced that users of the Coinbase Wallet can now easily earn interest by lending out their coins on decentralized finance (DeFi) applications.
In an official blog post on Wednesday, the exchange disclosed that a lot of its customers who make use of the Coinbase Wallet have been able to earn interest ranging up to 6% annual percentage rate(APR) by depositing millions of dollars into various DeFi apps such as dYdX and Compound.
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These users are able to access these DeFi apps via the Coinbase Wallet built-in decentralized application (dapp) browser or on their desktop via WalletLink.
However, users are faced with the challenge of not being able to compare rates from different providers as well as checking their balances.
This is a problem that Coinbase seeks to rectify by making it easier for clients to compare rates, check their balances, and deposit their crypto assets without any need for a browser and all this will be done via a simple unified dashboard.
More to that, Coinbase customers can lend out their cryptocurrencies on the DeFi apps and earn interests. These loans are reportedly backed by collateral from the borrowers in the event that they do not pay back, the collateral can be sold and the lenders will be repaid.
The exchange, however, warned its users that these DeFi apps are programs running on blockchain technology and just like any other computer protocol, they might have bugs that could result in the clients’ loss of funds.
Customers are advised to take time to conduct their own research on the apps, how they work and the potential risks associated with them, bearing in mind that Coinbase is not in control of the DeFi apps and that their deposits are not insured, thus, returns are not guaranteed.