Coinbase Plans to Roll Out Onchain Swaps for KYC-Verified Users

Coinbase, the largest U.S.-based centralized crypto exchange (CEX), announced Coinbase Pools, which provide userswith verified liquidity pools for onchain trading.

Coinbase Pools will be a curated selection of liquidity pools that are vetted and verified by Coinbase, and curated for Coinbase Wallet, its Prime onchain wallet, and other wallet solutions verified by Coinbase.

The initiative will provide a safe source for onchain swap transactions for retail and institutional users on Coinbase’s Ethereum Layer 2, Base.

According to Coinbase’s blog post, institutions benefit from verified pools through concentrated liquidity, controlled access, which ensures only verified users can interact with the pool, and autonomous asset control.

Coinbase Pools will use the Coinbase Verifications system, which is a know-your-consumer (KYC) verification system, aimed at reducing counterparty risk in an onchain environment. While KYC is often poorly received by crypto-native participants, the current onchain landscape can be costly for unsuspecting users through malicious tactics such as MEV attacks, honeypot contracts, and shallow liquidity pools.

The pools will leverage Uniswap’s v4 protocol, and collaborate with risk management firm Gauntlet, to “optimize liquidity pool configurations and overall liquidity pool health”.