Base, the network developed by Coinbase, has launched Earn & Borrow, a toolkit that lets wallets, exchanges and fintechs offer variable stablecoin yield and loans backed by crypto assets. It relies on third-party lending markets such as Morpho and Aave and is not a protocol of its own. Independent curators choose the markets and set risk limits, and Coinbase says it does not guarantee the vaults. Average yield on dollar stablecoins was reported at about 4.45% before incentives.

What it means: Base's pitch is to make decentralised finance a building block that slots into any app, much as card payments did through APIs. For fintechs that means offering yield or loans without becoming a bank. In Europe the picture is more complicated. MiCA does not fully cover crypto lending, and ESMA and the EBA have already asked for it to be examined in the regulation's review. A Greek app offering such yield to customers would need to check whether it is an investment service, a crypto-asset service or something that is not allowed without a specific licence. The risk for end users is real as well: smart contracts can have bugs, collateral can be liquidated in a sharp price fall and returns are not guaranteed. For Greek businesses holding cash in stablecoins, an attractive yield should not hide the fact that this is a completely different risk profile from an insured bank deposit. A clear treasury policy has to come first.

Read the original on Base

Related service: Consulting

Related stories