Coinbase Wallet lead Sid Coelho-Prabhu has announced via the Coinbase blog that users will have the possibility to lend crypto and earn interest.
The DeFi applications like Compound and DYDX already received millions of dollars from the investors. The interest rate for such applications can reach up to 6% APR. The Wallet’s decentralized build-in application browser allows users to select among many of such apps. Also, the feature will be available through the WalletLink app on Desktop. Wallet link is the DeFi script that allows users to connect the mobile crypto wallet to the average DeFi app.
It is pretty difficult to track the balances and accounts via all the Coinbase services. However, the Coinbase announcement claims that now users are getting the ‘no brainer’ Wallet Experience(c). Via the DeFi app, Coinbase users can look up the cryptocurrency prices offered by different providers (useful for large scale investors and everyone holding a tough portfolio). They deposit the cryptocurrency from an external wallet. At the same time, lenders don’t have to open a web browser. Also, the app provides a simple, unified Coinbase-style GUI. White and blues – classics.
New Lending Experience Available via Coinbase Wallet
The wallet will soon allow tens of thousands of people to make money on lending their cryptocurrency. Pick a coin that you want to lend out. Enter the amount you wish to lend after you picked the right smart contract. The cryptocurrency then goes to the smart contract address, so that the lending begins. Users will be watching the growing amount of funds directly in the Wallet. You can cash out anytime, just send the crypto from the smart contract back to the wallet.
The DeFi loans allow users to facilitate Ethereum blockchain to push the business on. The DeFi contract accepts your deposit, allowing you to start doing things with money. Per this particular contract, it makes sure that the supply and demand match and dynamically change the prices. The contract also makes sure that the borrower sent the collateral to receive the borrowed sum. For instance, when you want to borrow $50 via the app, you need to load it with at least $100 in cryptocurrency. The exact amount may vary depending on the contract conditions.
When the borrower repays the bills, the contract is closing. If he didn’t manage to do so, or the dollar value of collateral felt too much, the contract automatically liquidates the collateral to make payments to the lenders.
Be extremely careful when dealing with such apps, because they have a bad habit of automatically draining the collateral when the Ethereum price sharply goes down.