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Posted on January 18, 2022Update to asset listing announcements
One of the most common requests we receive from customers is to be able to trade more assets on our platform. As we continue to add assets to our exchange and platforms we have decided that we will no longer post individual blog posts and will only use Twitter to announce new asset listings.
Please make sure to follow @CoinbaseAssets for new asset announcements for Coinbase.com, iOS and Android apps, as well as Advanced Trading, Coinbase Pro, Coinbase Prime, Coinbase Custody and any new geo-fencing restrictions that may be lifted.
Please also make sure to follow @CoinbaseExch for new asset announcements for Coinbase Exchange and to be alerted as order books will launch in phases, auction mode then limit-only or full trading mode. If at any point one of the new order books does not meet our assessment for a healthy and orderly market, we may keep the book in one state for a longer period of time or suspend trading as per our Trading Rules.
To see a list of supported assets on Coinbase check out our new Asset Directory.
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Please note: Coinbase Ventures may be an investor in the crypto projects we offer, and additionally, Coinbase may hold such tokens on its balance sheet for operational purposes. A list of Coinbase Ventures investments is available at https://ventures.coinbase.com/. Coinbase intends to maintain its investment in these entities for the foreseeable future and maintains internal policies that address the timing of permissible disposition of any related digital assets, if applicable. All assets, regardless of whether Coinbase Ventures holds an investment or Coinbase holds for operational purposes, are subject to the same strict review guidelines and review process.
Crypto is a new type of asset. Besides potential day to day or hour to hour volatility, each crypto asset has unique features. Make sure you research and understand individual assets before you transact.
All images provided herein are by Coinbase.
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Update to asset listing announcements was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on January 18, 2022Coinbase and Mastercard partner to revolutionize NFT purchase experience
By Prakash Hariramani, Senior Director, Product
Our mission at Coinbase is to increase economic freedom in the world. By enabling more people to join the creator economy and profit from their work, NFTs (Non-Fungible Tokens) have an important role to play in this mission. However, the experience of purchasing an NFT remains complex for many users.
Coinbase wants to simplify the user experience to allow more people to join the NFTs community. Just as we helped millions of people access Bitcoin for the first time in an easy and trusted way, we want to do the same for NFTs.
That’s why we’re working with Mastercard to classify NFTs as “digital goods”, allowing a broader group of consumers to purchase NFTs. And, coming soon we’ll “unlock” a new way to pay using Mastercard cards.
Coinbase recently announced Coinbase NFT, a peer-to-peer marketplace that will make minting, purchasing, showcasing, and discovering NFTs easier. Thanks to our work with Mastercard, we’ll be able to provide a better customer experience on Coinbase NFT, and plan on working to find ways to bring this opportunity to the broader ecosystem through Mastercard’s scale and global network.
We applaud Mastercard’s leadership on this issue to make it as easy as possible to buy an NFT and make sure it’s the best consumer experience. The NFT revolution is just beginning.
To learn more, please visit Mastercard’s Newsroom for a blog post and Q&A on our NFT strategy.
Coinbase and Mastercard partner to revolutionize NFT purchase experience was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on January 14, 2022Incident Post Mortem: November 19, 2021
Summary
On November 19, 2021, Coinbase learned that it had erroneously credited some customers transacting in GYEN and POWR either 100x or 1/100th the amount they purchased. Coinbase promptly disabled trading in POWR and GYEN, worked around the clock to resolve the underlying technical issue, and then made adjustments in customer accounts to reflect the amount of GYEN and POWR that customers actually purchased. This incident affected approximately 0.0072% of Coinbase’s total verified users.
What happened?
On November 19 at approximately 4:00 p.m. EST, Coinbase updated an internal data source related to POWR and GYEN precision. The update was tested through our standard automated testing and deployment monitoring procedures. However, the testing didn’t detect that the update would propagate at various speeds through a number of internal systems and would result in customers being credited either 100x or 1/100th the amount of GYEN or POWR they purchased.
The data rollout error was identified through our position risk monitoring systems shortly after the November 19 4:00 p.m. EST update. At 5:35 p.m. EST, we disabled transacting in GYEN and POWR pending resolution of the underlying issue. At 7:26 p.m. EST, we identified accounts that transacted in GYEN or POWR during the data rollout, and temporarily restricted these accounts pending further investigation. By November 21, restrictions were removed for 98.8% of these accounts and, by December 13, Coinbase restored full trading for GYEN and POWR.
What did Coinbase do to correct the problem?
Coinbase immediately devoted substantial engineering resources to quickly correct the problem, ensuring our customers received the correct amount of GYEN and POWR that they purchased. For customers who were erroneously over-credited 100x the GYEN and POWR they purchased, we ensured that they received the correct amount of assets that they paid for. For those who still had GYEN and POWR in their accounts, this was relatively straightforward — we notified customers of the error and simply debited those customers’ accounts, removing the extra GYEN or POWR that was erroneously credited.
Some customers had already converted their GYEN and POWR to other digital assets, such as Bitcoin. Other customers sent their GYEN and POWR to wallets off the Coinbase platform, but kept other digital assets on the Coinbase platform. For these customers, we notified them of the error and, in accordance with the Coinbase User Agreement, withdrew other assets from these customers’ Coinbase accounts equal to the amount of GYEN or POWR they had been over-credited.
When determining how much to debit from these customers’ accounts, we used the most favorable exchange rate for our customers. Specifically, we calculated the USD value of the GYEN or POWR owed to Coinbase by using the lowest exchange rate on the Coinbase Exchange from the time this incident began until trading was halted ($0.00825/GYEN, $0.4742/POWR). This minimized the amount owed to Coinbase by these customers. We then debited funds from user accounts up to this USD value, starting with their fiat balances, then USDC and other stablecoin balances, followed by other digital asset balances ranked by descending market cap. The value of these digital assets was calculated using the market rate at the time user accounts were debited.
A small group of customers who were erroneously over-credited GYEN or POWR sent these digital assets off-platform and left no other assets on the Coinbase platform. Coinbase has been reaching out to those customers individually and appreciates our customers’ cooperation returning the erroneously credited GYEN and POWR. Repayment of the over-credited funds is required under the Coinbase User Agreement.
For customers who were undercredited GYEN or POWR, receiving a lower amount than they purchased, Coinbase first determined the amount of GYEN or POWR owed to these customers. Coinbase then calculated the USD value of the GYEN or POWR owed to customers by using the highest exchange rate from the start of the incident until the remediation process was completed ($0.009799/GYEN, $0.9617/POWR), which was the most favorable exchange rate for our customers. That means that regardless of the price customers purchased at, we assumed that the customers would have sold these assets at the highest price while trading was disabled. After calculating this USD value, we credited customers an equivalent amount of Bitcoin. We credited these customers in Bitcoin because GYEN and POWR trading was still suspended, and Bitcoin is used in every country where customers were affected.
To further benefit our customers we used an exchange rate of $55,000/BTC, which was lower than the market rate of BTC at the time these BTC payments were made. This exchange rate ensured our customers received more Bitcoin than they would have received had we used the actual BTC-USD exchange rate at the time.
Additionally, for all customers whose accounts were restricted, Coinbase provided a customer experience credit of up to $100 in BTC.
What happens next?
Many customers still have questions about how their accounts were credited or debited because of this incident. For questions specific to your account, please feel free to reach out to Coinbase Support.
Coinbase is also revising the information in our customers’ account statements and tax forms to correctly reflect our customers’ GYEN and POWR transactions. If your statements or tax forms appear incorrect, please reach out to Coinbase Support, but know that we are working to correct that information as well.
GYEN Values Before the Data Rollout Error.
In the days leading up to the data rollout error, between November 16 and November 19, Coinbase Exchange observed GYEN-USD break parity when compared to JPY/USD. We have seen customers speculate on social media that this incident was somehow related to this break in parity. We have also seen customers speculate that this break in parity was somehow caused by Coinbase. These allegations are false and reflect a misunderstanding about what GYEN is and how Coinbase works.
The Break in Parity Occurred Before and Was Not Related to the Incident. This break in parity occurred days before the incident. At the peak of this break in parity, on November 17, 1 GYEN traded for approximately ¥7.48.
The price of GYEN (blue) in Yen (red) during the break in parity, with a high of ¥7.48 (Red Line Indicating the time of the Data Rollout Error) By the time the data rollout error occurred, on November 19, GYEN’s price stability had recovered and GYEN was trading at approximately ¥0.96–0.98. When Coinbase unrestricted impacted customers’ accounts, GYEN was trading at approximately ¥0.98. In other words, the break in parity occurred before the data rollout error and the two issues had nothing to do with each other.
How the Break in Parity Occurred. When Coinbase listed GYEN, there was significant demand for GYEN that could not be matched by supply. The surge in buyer demand for GYEN, coupled with the insufficient supply of GYEN across all markets (not just Coinbase), ultimately caused the break in parity. From November 17 through November 19, Coinbase implemented an alert, informing its customers who were buying, selling and trading GYEN of “Unusual Market Activity — Due to unusual market activity for GYEN, you may have trouble trading GYEN on Coinbase.com. We apologize for any inconvenience caused by this.” The break in parity occurred because of these market conditions specific to the GYEN digital asset unrelated to Coinbase operations.
Incident Post Mortem: November 19, 2021 was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on January 14, 2022Coinbase Expands Live Customer Support
By Casper Sorensen, Vice President, Customer Experience
The following is the latest update in our series of blog posts describing our commitment to continuously improving our customer experience.
In past blog posts we highlighted our ongoing journey to create more value for customers with our support experience. In 2021, we invested in providing improved support experiences by increasing our staffing, accelerating our response times, as well as adding dozens of educational resources to our help pages so customers can get the most accurate information on our products and services.
In our pursuit to provide customers with the most trusted customer service experience in crypto we are excited to highlight new live support options for our customers.
In Q4 we began offering localized phone support for retail customers in the US, UK, Ireland, Germany, and Japan. Whether the question is simple or complex, our trained professionals are ready to help. These new phone support options expand on the Coinbase One support which launched in October 2021 and is available to customers in the United States 24/7 from a dedicated team, and the fastest answer times in crypto.
In December 2021, we began providing US retail customers with live messaging via our new Help Center platform. Live messaging offers customers the flexibility to connect with us when the time is right and continue the conversation seamlessly if they have to step away. Our team of customer service experts are available via messaging 24/7 with the speed our customers expect.
The journey continues in 2022, we will provide more localized phone and messaging options for our customers globally as well as bring further enhancements to our in-app support experience for iOS and Android.
We remain deeply focused on providing our customers with intuitive support technology and appreciate patience as we continue to grow. We look forward to continuous enhancements so please stay tuned to this blog for updates on the status of our journey.
Coinbase Expands Live Customer Support was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on January 14, 2022Coinbase Voices: Why I decided on a career in crypto
Coinbase Voices is a collection of employee stories that highlight the expertise of our Coinbase team and share their journeys to crypto. In this post, Carolina Verdelho, Senior Recruiting Manager, discusses her experience as an international recruiter and how she’s using it to help shape the future of Coinbase.
Tell us about your journey to becoming a Sr. Recruiting Manager. What does your job entail?
I’ve been in Recruiting for more than 15 years now, and have always worked with tech companies. I started my career in Brazil, working in traditional tech like Dell and Oracle, hiring people across all of Latin America in technical, sales and business positions.
My first language is Portuguese, but because I had exposure to other countries from the start, I also learned to speak Spanish and English. I didn’t expect to get into Recruiting at first — in fact, it was my last choice of careers. Now, don’t even think about taking me away from it! It’s what I love.
What made you want to work at Coinbase?
I had worked for almost nine years at Facebook when I decided I needed something new. One day, I was talking with a friend and shared that I wanted to do something different, but didn’t know what that was. He pointed out that when I joined Dell, the company was going to Retail, and when I joined Oracle, it was launching software as a service. When I joined Facebook, no one knew what social media would turn out to be. I joined at a pivotal time in those companies’ journeys. He said, “I think you should do that again.” He works for a blockchain company and suggested that I try the crypto environment. I wasn’t sure, but I started doing some homework and changed my status to Open on LinkedIn. To my surprise, someone from Coinbase reached out to me, along with five other crypto companies. I thought, maybe my friend is right — maybe it is for me. From there, I started talking to people at Coinbase and learning more about what the company had to offer.
Candidates often ask me during interviews: Why did you decide to leave Facebook and join Coinbase? I find myself giving the same answer that I gave when I joined Facebook nine years ago. At that time, it was a company of 4,000 global employees. I remember the VP of Engineering asked me why I wanted to join, and what I thought the company would be in five years. I told her, “I don’t know what this company is going to be in the next five years — and that’s exactly why I want to join. I want to help build it.” It’s the same for Coinbase — I don’t know where we’ll be in five years, but I want to help us get there.
What project are you working on over the next 60 days?
My role has changed quite a bit since I joined Coinbase in May of this year. I wear three different hats: I manage a Recruiting team hiring engineering managers in the United States; I’m helping to stand up recruiting efforts in Latin America, including Brazil and others; and, I’m doing the same for EMEA, in the UK, Ireland, Israel and more.
Internationally, we are starting everything from scratch — hiring recruiters, finding agencies who will help us, and establishing a system for how to hire in each country. We’re in hyper-growth mode, and it’s an exciting time to be here — especially on the Recruiting team.
What’s it like working for a remote-first company? What advice would you give to someone considering it?
I was at Facebook when the pandemic hit and everyone went remote, and was later offered the opportunity to work from home full-time. When I was looking to join another company, that was one of the mandatory requirements for me.
Remote work allows me to balance managing a family — a husband, kids and a dog — while also working and being as available as I can be. It doesn’t make sense for me to commute 30–40 minutes in the car when I could be doing something productive, like supporting my team or finding a solution to a problem. Working remotely is the best use of my time.
I also love that we have a lot of tools that help us interact with each other. We use Slack and Google Meet to connect, so I don’t miss out on meeting people. I think I know people better now in this virtual environment than I did face-to-face. I get to know more about them and really talk to them instead of just seeing each other in passing.
The one piece of advice I would give to people is to set boundaries. I make sure I have a dedicated workspace where I can be 100% focused on what I’m doing. When I’m there, my brain recognizes that I’m working. Then, when I’m done and it’s time to be with my family, I can close the door and detach from work.
Finally, just because I can be at the computer at any time doesn’t mean I’m available at any time. If you don’t set boundaries upfront, things will be difficult. Use your ‘me’ time to be with your family, take care of yourself, exercise, read a book, go for a walk — get fresh air. It’s important to set aside time in your day to recharge, then hit the ground running when it’s time to work.
What’s it like onboarding remotely?
I really had a hard time the first two days at Coinbase — it was difficult for me to understand what was going on. I told my husband, “What have I done?” He reminded me that I was at a company for nine years and things would be different now. In the days following, people were very open to supporting me, explaining things, and helping me understand why we do things the way we do here.
I think onboarding remotely is a bit of a challenge because you’re essentially opening a different computer in the same place you were working the day before, for a different company. After a few days, I started to catch on — I think giving time to acclimate to the culture and providing access to resources makes a huge difference. I had an amazing buddy who helped me onboard and was always available and checking on me. That was a total game-changer.
What do you value most about Coinbase’s culture? What do you think sets it apart?
I took a leadership course a few years back, where the teacher said that we should hire people not only by their skills or experience, but by their values, and that the values of the person should match the values of the company. Before I interviewed with Coinbase, I read the values and asked myself if I could work and operate following them. The answer is a huge yes.
There’s a cultural value here that’s very important to me: Act Like an Owner. It might be because I’m driving a lot of things for international expansion, but I strongly believe that I shouldn’t expect or wait around for others to take care of something for me. I should own it and ensure its successful completion.
I think what sets Coinbase apart for me is the winning combination of a solid business foundation, a very strong leadership team, and the excitement of hyper-growth. You don’t find this often. Being able to join this company and put your fingerprint on this growth and say, “Hey, I was the one who did this, who moved this needle or helped jumpstart that initiative,” that’s such a rare and exciting opportunity. Coinbase also gives people the responsibility and accountability to push the company forward — everyone feels like they’re a part of something bigger than themselves, and that’s something that I love.
Tell us something about you that we wouldn’t know from your LinkedIn profile.
Something not many people know is that my first job was working at the video rental store, Blockbuster. I was watching a documentary about the company a few weeks ago and thinking back on all that I learned in that experience: How to listen to people, how to approach people that I don’t know, how to offer my help and manage expectations. I learned a lot from that experience, and I’m very thankful.
I can also say that I learned a lot from my recruiting experience there. I walked away thinking, how can I do better for people? How can I be respectful of their time and feelings? Maybe being a part of that process helped shape the Recruiting professional I am today.
Coinbase Voices: Why I decided on a career in crypto was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on January 14, 2022Coinbase Cloud Launches a Forum for Web3 Developers
By Larry Kubin, Senior Developer Relations Engineer
Last year, Coinbase Cloud announced the launch of our unified developer docs to make it easier and faster for developers to build Web3 applications using Coinbase APIs and services. As part of our commitment to developers and embracing the collaborative spirit of Web3, today Coinbase Cloud is launching a forum for developers to connect with Coinbase engineers, share projects, get feedback, ask questions, and learn how to build with our APIs and services — including Coinbase Wallet, Exchange/Pro, Sign in with Coinbase, Rosetta, and more.
The Coinbase Cloud developer forum
We encourage the Web3 developer community to leverage this forum to share information and learn from each other. Whether you’re creating a dapp, building the next blockchain game, or launching an NFT project, you’re likely looking for input and recommendations for secure, scalable, and tested tools for your tech stack. Developers can connect with the Coinbase Cloud community, including engineers and moderators who will be able to answer questions and engage in technical discussions.
To get started, we’ve created categories for general discussion, announcements, product usage, bug reporting, and sharing feedback. These categories will evolve as we gather feedback from the community and roll out additional products and services.
More ways to connect
In February, Coinbase Cloud will be at ETHDenver hosting community events and hands-on workshops, including a guide for integrating Coinbase Wallet into your projects. You’ll have the opportunity to ask questions, learn about our developer resources, and share your Web3 goals. By the end of the workshop, you will have the tools you need to integrate your dapp with Coinbase Wallet. We hope to see you there!
In the meantime, say hi and share what you’re building in the Coinbase Cloud Developer Forum.
Coinbase Cloud Launches a Forum for Web3 Developers was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on January 13, 2022Announcing our second developer grant winners
By Trent Fuenmayor, Program Manager, Coinbase Giving
In August, we made a call for applications through our Crypto Community Fund focused on blockchain developers who contribute directly to a blockchain codebase, or researchers producing white papers. Today, we’re excited to announce the Fund’s second batch of developer grants to 6 recipients: AMIS Technologies, Josie, Escanor Liones, WeFuzz Research, and two developers funded through a partnership with Brink.
All candidates demonstrated a consistent history of contributing to blockchains, as well as innovative ideas, and provided the Fund’s advisory board with a clear, actionable outline of the projects they intend to work on. They will both be funded to work on their projects for all of 2022, with their grants funded in BTC or USD based on the recipient’s preference.
AMIS Technologies (github, blog) will be providing various digital signature protocols based on multi-party computation (abbrev. MPC) in the blockchain including ECDSA, Schnorr Signature, Bls Signature, and Bip32( i.e. Hierarchical deterministic wallet). The audited Library will continue to open to developers. They believe that MPC will be an alternative option for private key management.
Josie (github, twitter) will be working on the unit, functional, and fuzz testing in Bitcoin Core by focusing on improving test coverage and refactoring for performance and clarity. He will also be supporting three researchers on a project centered around analyzing bitcoin transactions, specifically on fees and privacy when used as a means of payment. Last but not least, he will be performing code review and testing PRs in Bitcoin Core.
Escanor Liones (github, twiter) will be designing and implementing a sequence of blockchains to promote the study, advancement and improvement of mathematics, cryptography and digital security. The present grant will fund one of those blockchains. His previous published work focused on Information-Theoretical Private Information Retrieval (IT-PIR) in the form of a practical Postgres C/C++ Extension using Quantum Resistant Lattice-based Cryptography; see the open sourced implementation here. A paper will be published with the details about the design in early summer; and, a blog or a paper towards the end of the year speaking to the implementation and the experience of designing, building and deploying a blockchain.
WeFuzz (github, twitter, website, discord) plans to build a, fully decentralized, crowdsourced security audit and bug bounty platform: a set of smart contracts that allow developers and companies to get their smart contracts, blockchains, web3 applications etc., audited by the decentralized auditors’ and hackers’ community and makes it easy for everyone to secure their assets. WEFUZZ (Chaitanya and Ranjeet) aims to become the *Hacker DAO*.
Brink (website) is a 501c3 that exists to strengthen the Bitcoin protocol and network through fundamental research and development, and to support the Bitcoin developer community through funding, education, and mentoring. They support and mentor new contributors to open source Bitcoin development through their fellowship program, and support the work of established Bitcoin protocol engineers through their grants program. Coinbase has funded two Bitcoin core developers through their partnership with Brink.
The Crypto Community Fund grantees will provide periodic updates about their work through public blog posts. The Fund will also be placing an additional call for developer grants later this year, and encourages future applicants to subscribe to updates here.
Announcing our second developer grant winners was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on January 13, 2022Inverse Finance (INV), Liquity (LQTY), Polyswarm (NCT) and Propy (PRO) are launching on Coinbase
Starting today Inverse Finance (INV), Liquity (LQTY), Polyswarm (NCT) and Propy (PRO) are available on Coinbase.com and in the Coinbase Android and iOS apps. Coinbase customers can now trade, send, receive, or store INV, LQTY, NCT and PRO in most Coinbase-supported regions, with certain exceptions indicated in each asset page here. Trading for these assets is also supported on Coinbase Pro.
Inverse Finance (INV) is an Ethereum token that powers Inverse Finance, a decentralized platform for lending, borrowing, and creating synthetic assets. INV is used to govern Inverse Finance products and can be used to vote for future upgrades.
Liquity (LQTY) is an Ethereum token that powers the Liquity protocol, a decentralized borrowing platform for 0% interest loans using ETH as collateral. Loans are paid out in a stablecoin called LUSD, and LQTY holders can stake their token to earn a portion of fees generated by opening and closing loans.
PolySwarm (NCT) is an Ethereum token that powers PolySwarm, a community and network for detecting malware. NCT rewards are distributed to users who provide relevant cybersecurity data while NCT is used to access insights provided by the network.
Propy (PRO) is an Ethereum token that powers Propy, a platform for international real estate transactions. The PRO token is used to pay for platform fees such as for modifying and creating title and deed contracts.
One of the most common requests we hear from customers is to be able to buy and sell more cryptocurrencies on Coinbase. We announced a process for listing assets, designed in part to accelerate the addition of more cryptocurrencies. We are also investing in new tools to help people understand and explore cryptocurrencies. We launched informational asset pages (see INV, LQTY, NCT and PRO ), as well as a new section of the Coinbase website to answer common questions about crypto.
Customers can sign up for a Coinbase account here to buy, sell, convert, send, receive, or store e Coinbase Android and iOS apps. Coinbase customers can now trade, send, receive, or store INV, LQTY, NCT and PRO today.
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Please note: Coinbase Ventures may be an investor in the crypto projects mentioned here, and additionally, Coinbase may hold such tokens on its balance sheet for operational purposes. A list of Coinbase Ventures investments is available at https://ventures.coinbase.com/. Coinbase intends to maintain its investment in these entities for the foreseeable future and maintains internal policies that address the timing of permissible disposition of any related digital assets, if applicable. All assets, regardless of whether Coinbase Ventures holds an investor or Coinbase holds for operational purposes, are subject to the same strict review guidelines and review process.
This website contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of Coinbase, Inc., and its affiliates (“Coinbase”), and Coinbase is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. Coinbase is not responsible for webcasting or any other form of transmission received from any Third-Party Site. Coinbase is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by Coinbase of the site or any association with its operators.
Crypto is a new type of asset. Besides potential day to day or hour to hour volatility, each crypto asset has unique features. Make sure you research and understand individual assets before you transact.
All images provided herein are by Coinbase.
Inverse Finance (INV), Liquity (LQTY), Polyswarm (NCT) and Propy (PRO) are launching on Coinbase was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on January 13, 2022A simple guide to the Web3 stack
Web3 is the latest buzzword to see an uptick in interest in recent months — What does it actually mean?
Around the Block from Coinbase Ventures sheds light on key trends in crypto. Written by Connor Dempsey, Angie Wang & Justin Mart.
A lot of definitions have been thrown around, but at Coinbase, we generally think of Web3 as a trustless, permissionless, and decentralized internet that leverages blockchain technology.
Web3’s defining feature is ownership. Whereas the first iteration of the commercial internet (Web1) was read-only for most users, and Web2 allowed users to both read & write on centralized platforms (Twitter, Facebook, YouTube, etc), Web3 gives users full ownership over their content, data, and assets via blockchains. It empowers users to read-write-own.
Where a third party like Facebook owns your identity and data in Web2, your identity in Web3 can move fluidly between platforms without your data being captured and monetized by service providers. While Web2 apps are centrally controlled, tokens in Web3 grant users the right to help govern the services they use, representing a form of ownership in the platforms themselves.
With that framing in mind, what does the Web3 stack look like?
The Web 3 stack
The Web3 stack is still nascent and fragmented, but with much innovation over the years, it’s beginning to come into focus. What follows is not a mutually exclusive nor completely exhaustive lay of the land. Rather, it’s a framework for thinking about this landscape as it continues to evolve.
Let’s start from the bottom up.
Protocol Layer
At the bottom of the stack, we have the protocol layer. This is made up of the underlying blockchain architecture on top of which everything else gets built.
Bitcoin is the granddaddy of them all, and while it doesn’t play a major role in Web3 today, it pioneered the ability for someone to own a scarce digital asset through the use of public-private key cryptography. Following Bitcoin, came a range of layer 1 smart contract platforms like Ethereum, Solana, Avalanche, Cosmos, etc, that serve as the foundation for many of the Web3 applications currently in production.
Bitcoin and Ethereum each have additional protocols built on top of them. Bitcoin has networks like the Lightning Network (for fast and cheap payments) and Stacks (for smart contracts), among others. To alleviate its capacity limitations, multiple layer 2 scaling protocols have been built on top of Ethereum.
With the rise of many layer 1 and layer 2 networks came the need to bridge value between them. Enter cross-chain bridges that serve as highways that let users move value from one chain to another (useful cross-chain dashboards can be found here and here).
Infrastructure / Category Primitives
The infrastructure layer sits on top of the protocol layer and is composed of interoperable building blocks (what we’re calling “category primitives”) that are highly reliable at doing a specific task.
This is a dense and diverse layer, with projects building everything from smart contract auditing software, data storage, communication protocols, data analytics platforms, DAO governance tooling, identity solutions, financial primitives, and more.
For example, Uniswap enables the swapping of one asset for another. Arweave enables data to be stored in a decentralized manner. ENS domain names can serve as a user’s identity in the world of Web3. A user can’t do much with each standalone application. However, when combined, these category primitives act like lego bricks that a Web3 developer can use to construct an app.
Use Case Layer
Atop the protocol and infrastructure layers sit the use case layer, where it all comes together.
Take a blockchain based game like Axie Infinity, which uses Ethereum tokens and NFTs that can be bridged to a low-cost/high throughput sidechain called Ronin. Players often use Uniswap to swap ETH for the tokens needed to play the game. Similarly, decentralized blogging platform Mirror uses the storage protocol Arweave to store data. Meanwhile, it leverages Ethereum to let publishers get paid in crypto, often by directing tokens to their ENS address.
You’ll notice that Uniswap appears both in our infrastructure and use case sections. This is because, while at its core Uniswap is simply a series of smart contracts, it also provides a frontend that users can interact with directly. Put differently, it simultaneously serves as a standalone user-facing app as well as infrastructure for other Web3 apps like Axie Infinity.
Access Layer
At the tippy top of the stack sits the access layer — applications that serve as the entry point for all manner of Web3 activities.
Want to play Axie Infinity or get paid for your content on Mirror? First thing you’ll need is a wallet, which serves as the main point of entry for most Web3 applications. Fiat onramps like Moonpay, Wyre, or exchanges like Coinbase help users trade their fiat money for crypto in order to get started.
With some crypto in a wallet, users can head to an aggregator like DappRadar to browse through and connect to all kinds of Web3 applications in one place. Other projects like Rabbithole help users discover and learn how to use various Web3 applications. There are also aggregators like Zapper, Zerion, and Debank that help users track all of their activities and assets across various apps.
Lastly, we’re close to a future in which Web2 platforms where cryptonative communities already gather, like Reddit and Twitter, serve as an entry point for Web3. Reddit’s long-awaited crypto initiative will let certain communities tokenize, rewarding users with tokens and likely NFTs for active participation. Twitter already boasts an integration with Bitcoin’s Lightning Network to let users tip others in BTC.
The ever-evolving stack
The protocols, infrastructure, user applications, and access points named above make up the nascent, yet evolving world of Web3: an internet owned by its users. Beyond ownership, the power of Web3 lies in its modularity and interoperability. Essentially, this means that there are endless ways that the above stack can be combined to create new and interesting use cases — a feature that we expect will lead to a Cambrian explosion of new, world-changing applications.
While the framework and layers we highlighted will likely stay unchanged, we expect the projects and opportunities within them to evolve dramatically in the coming years.
Web3 Reads
- A thoughtful critique on Web3, by Moxie Marlinspike
- A rebuttal to Moxie, from Vitalik Buterin
- Are we doomed to repeat web2 history? by Sarah Guo
- The Architecture of a Web 3.0 application, by Preethi Kasireddy
- Web3 in a nutshell, by Eshita
- The Web3 World, by Grace Isford
- The Web3 Renaissance: a Golden Age for Content, by Li Jin & Katie Parrott
Web3 Tweets
- What is Web3, from Luke Youngblood
- A guide to making the jump from Web2 to Web3, from obheda12
- The only web3 stack that will survive the test of time, from The Graph
- Why everyone will need Web3, from Balaji Srinivasan
- What is Web3? from Dan Khomenko
Previous editions of Around The Block
- DAOs: Social networks that can rewire the world
- Scaling Ethereum & crypto for a billion users
- Coinbase Ventures 2021-Q3 activity and takeaways
- The Coinbase Ventures Guide to NFTs
- Loot Project: the first community owned NFT gaming platform
- Axie Infinity, Yield Guild Games & the play-to-earn economy
This website does not disclose material nonpublic information pertaining to Coinbase or Coinbase Venture’s portfolio companies.
Disclaimer: The opinions expressed on this website are those of the authors who may be associated persons of Coinbase, Inc., or its affiliates (“Coinbase”) and who do not represent the views, opinions and positions of Coinbase. Information is provided for general educational purposes only and is not intended to constitute investment or other advice on financial products. Coinbase makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information on this website and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Unless otherwise noted, all images provided herein are the property of Coinbase. This website contains links to third-party websites or other content for information purposes only. Third-party websites are not under the control of Coinbase, and Coinbase is not responsible for their contents. The inclusion of any link does not imply endorsement, approval or recommendation by Coinbase of the site or any association with its operators.
A simple guide to the Web3 stack was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on January 12, 2022Coinbase’s path to creating a robust and regulated crypto derivatives market
- Coinbase is acquiring FairX, a CFTC-regulated derivatives exchange
- The acquisition is a key stepping stone on Coinbase’s path to offer crypto derivatives to retail and institutional customers in the US
- This is an important step toward Coinbase ultimately making the derivatives market accessible to our millions of customers through an industry-leading, simplified user experience
Coinbase is committed to providing our retail and institutional customers with the most trusted and complete suite of trading tools to access the cryptoeconomy. As crypto matures as an asset class and the world’s most sophisticated investors deepen their journey into the cryptoeconomy, a healthy, well-regulated derivatives market will be critical for long-term success.
Today, we’re announcing the acquisition of FairX, a CFTC-regulated derivatives exchange or Designated Contract Market, which represents our next step toward creating the robust and holistic trading environment investors are seeking. Through this acquisition, we plan to bring regulated crypto derivatives to market, initially through FairX’s existing partner ecosystem. Over time, we plan to leverage FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the US. We want to make the derivatives market more approachable for our millions of retail customers by delivering an easy-to-use user experience that Coinbase is known for.
Deep and liquid derivatives markets are essential to the functioning of traditional capital markets. These products are in high demand from investors who seek to effectively manage risk, execute complex trading strategies, and gain exposure to crypto outside of existing spot markets. The development of a transparent derivatives market is a critical inflection point for any asset class and we believe it will unlock further participation in the cryptoeconomy for retail and institutional investors alike.
FairX brings a world-class team with deep expertise across product development, market structure, and compliance to Coinbase. Its market-leading exchange technology and proven ability to deliver listed futures in a straightforward, easy-to-understand structure, aligns with Coinbase’s commitment to creating a more fair, accessible, efficient, and transparent financial system enabled by crypto.
The acquisition is subject to customary closing conditions and reviews, and is expected to close in Coinbase’s first fiscal quarter. FairX will operate normally during this period. We look forward to sharing more updates as they become available.
Coinbase’s path to creating a robust and regulated crypto derivatives market was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
