Hi folks — we built a new product at @coinbase that lets you borrow USDC against Bitcoin, fully onchain and dead simple to use. 

We call this the DeFi mullet. CeFi in the front and DeFi in the back. 

This was a year long project with first principles thinking. 

➡️ Doing an AMA through the weekend. Fire away questions or thoughts.

Product @ Coinbase. Techno optimist 🛠️

summoning /daylight | kylemccollom.com | we are hiring: careers.daylight.xyz

All onchain financial services out there, both in DeFi and otherwise. 

Think Lend, Trading, NFTs, Prediction Markets, etc. 

Can’t comment on what’s next but you can imagine whatever useful and exciting innovation is happening, we are closely looking.

what other mullet products do you think are low hanging fruit next?

DeFi

Actually - the best next onchain abstraction would be yield on USDC (including Morpho rewards). 

This teaches new users 1) yield onchain is huge and 2) you can get rewards 

Coinbase should be the curator/assure no bad debt & assume the risks (eg lend isolated to cbBTC and cbETH)

- how do you prioritize integrations or protocols?
- does Coinbase layer on their own security (like Hypernative)? Or provide additional audits?
- do you simply notify when LTV is dangerous or will you have a repay feature like DefiSaver?

you probably don’t think about liquidity enough // it is what it is  // build value, not valuation

| 🎩  |  ↑  |  ⌐◨-◨

1. Simply put — UX and user safety come first followed by the technology itself. Prioritize based on the merits of the protocol traction, usability and the team itself. 
2. Depending on the layer in the product, we do add security controls and mitigations to safeguard users. We take audits and engineering practices seriously and it’s #1 requirement from our side. 
3. Notifications for now but self repay / defi saver feature can come later. What do you think the experience should look like for that?

- how do you prioritize integrations or protocols?
- does Coinbase layer on their own security (like Hypernative)? Or provide additional audits?
- do you simply notify when LTV is dangerous or will you have a repay feature like DefiSaver?

https://warpcast.com/langchain/0x15dbe107

Just A Girl & Her Cryptos 💙 GLOOM Enjoyoooor 👽 Gloomer /gloomtoken - FID: 20147.

Yeah pretty much. Wrapping BTC and locking it in Morpho, all controlled by the users wallet.

Question, are you essentially just wrapping the BTC & staking on their behalf on Morpho?

Decentralized open source consciousness | Values-aligned communities | citizen of Black Rock City

In short, the 4 main layers of risks to the user are:

1. Morpho - smart contract hacks, economic failure during black swan events and lack of liquidity to scale. 
2. cbBTC - depegs, SC vulnerability, etc 
3. Smart Contrat Wallet issues
4. Coinbase itself - potential reg issues, app downtime, and any account restrictions due to compliance or security policies preventing you access from your loan or embedded wallet temporarily.  

A number of these issues are mitigated to the best effort using our threat models and stop gaps to ensure quick responses in situations of hacks especially. 

That said, onchain financial services do come at a cost to the user and such losses will not be covered by Coinbase as we are operating a front-end technology solution to DeFi. 

There might be unique situations where losses could apply on behalf of Coinbase to the customer and more details can be found in our ToS.

What are the risks beyond liquidation?

In response to those risks, if something goes wrong and happens to the collateral,   Does Coinbase take on those losses or are they shared with the consumer?

Good question. We are aware of the liquidity constraints of DeFi. Hence why we’re also open to integrating a multitude of protocols depending on the needs of our users. We currently don’t plan to use our balance sheet to finance any of the credit. 

Liquidity begets liquidity though and Morpho can scale as is.

Do you have a liquidity buffer to deploy as credit in case product adoption picks up and the underlying pool's utilization rate goes through the roof? "Mullet users" might keep a close eye on their health rate but not realize that the cost of their debt is skyrocketing. 

Super edge case but curious to know if it was accounted for.

Stay Curious // iixii // Lazer Technologies // Prev: CoinDesk, Roc Nation // based

No minimums. We just provide whatever is doable on DeFi via Morpho. 

Requirement today is that you need to be a Coinbase verified user in the US (excl. NY). 

The loan limits are currently capped to ~$100k to ensure product quality but will be raised soon.

Contributor @ /walletbeat.

Censorship resistance requires privacy.

Hacks are unique and there is no coverage for this scenario. User holds the liability as they are using Morpho directly and we are just a technology provider.

Given that Coinbase operates cbBTC as well, we have the ability to react real time on hacks to pause redemptions, transfers or blocklist the hacker to prevent any damages. 

Morpho has gone through 27 audits across 12 different firms so our analysis gives confidence in a low hack probability. Risk still exists nonetheless. 

More information is disclosed in our ToS.

How would you handle a scenario where the Morpho smart contracts have a vulnerability and get drained out of their cbBTC?
(Clearly Coinbase still holds all the BTC in custody, but what next?)

Founder https://tuum.tech | @intori | /intori | Exploring Farcaster and Base → https://paragraph.xyz/@bullers

Based on current guidance, Coinbase will not be reporting the wrapping of BTC to cbBTC as a taxable event to the IRS. Please consult a tax professional for personalized tax advice tho.

Does this create a taxable event for the BTC?

Founder of alphagrowth.io |
Compound DAO BD 

Open to other lending protocols or Vault like Compound?

Will love to jump on this
Is it already live or you will run a testnet phase of this

Unlearning. Full time product manager. Part time builder/tinkerer on farcaster. Bots: @nftsoffc.

We plan to roll out more collateral assets like ETH this year.

Congrats on the launch. 

Is the plan to add borrowing against ETH and other assets in the near term roadmap?

I'm in CA. Not seeing it in my Cash portion of either desktop or mobile - is the rollout based upon region, BTC holdings volume, maturity of account?