Coinbase, the popular cryptocurrency exchange, has called on developers to create stablecoins that track inflation on its new Base network. The move is part of a larger push by Coinbase to innovate and improve the decentralised finance (DeFi) ecosystem.
The exchange has identified four key areas of focus for developers to build on Base, including an inflation-tracking stablecoin, an on-chain reputation system, an on-chain limit order book exchange, and tools to make DeFi safer for users.
Coinbase believes that an inflation-tracking stablecoin is essential in the current economic climate. The exchange argues that the legacy financial system is causing economic uncertainty, and stablecoins that track the rate of inflation could provide stability in purchasing power while also offering resiliency from this uncertainty. Unlike traditional stablecoins that are pegged to a reference asset like the US dollar, inflation-pegged stablecoins, or "flatcoins," aim to be pegged to the price of living by tracking consumer price index and inflation data.
Coinbase is also urging developers to focus on building an on-chain reputation system that can establish trust between users. The exchange believes that such a system could implement a credit score or rank-like system to ensure that certain criteria are met before an on-chain identity can interact with a DeFi application. This could look like a FICO or Google page rank type score on ENS names, ratings/reviews for merchants, and other measures that help build trust onchain. However, Coinbase emphasises that any reputation protocol must preserve user privacy and autonomy.
In addition to an inflation-tracking stablecoin and an on-chain reputation system, Coinbase is calling on developers to build an on-chain limit order book exchange that eliminates counterparty risk through self-custody. This would allow professional traders and institutions to execute trading strategies they are familiar with in the traditional financial system, while also taking advantage of the high throughput of Base to design new mechanisms for spot trading, limit orders, options, perpetuals, and more.
Finally, Coinbase is calling on developers to make DeFi safer for users and developers by enabling tools that protect against smart contract code vulnerabilities and protocol logic errors. The exchange believes that self-service security testing tools, stronger auditor services, and insurance protocols could all help mitigate threats to the ecosystem.
To help fund early-stage projects building on Base, Coinbase has launched its Base Ecosystem Fund. The layer-2 network now supports over 30 blockchains, according to a recent post by Base. By focusing on these four key areas of innovation, Coinbase hopes to make the DeFi ecosystem more robust, accessible, and secure for all users.
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