Coinbase’s new venture capital fund has announced a strategic investment in Compound, a startup that is building money market accounts for cryptocurrency investors.
Compound is the first project to receive venture funding from Coinbase as part of the company’s new efforts for fostering blockchain innovation. As CCN reported, Coinbase announced the new venture fund to incubate early-stage startups in the exploding industry.
Coinbase’s funding is part of a larger $8.2 million seed funding round, which pools other backers including Bain Capital Ventures, Andreessen Horowitz and Polychain Capital, with participation from Transmedia Capital, Compound Ventures, Abstract Ventures, Danhua Capital.
While other coin and token projects have debated ways to generate interest or dividend income, Compound has run with the idea. In a blog update, Salil Deshpande, Managing Director at Bain Capital Ventures, he states that current lending solutions for cryptoassets “are not good enough: they are either centralized and have substantial counterpart risk, or require robust order books for each type of cryptoasset, which generally do not exist.”
Compound’s mission is to put cryptoassets to work that now “sit idle on exchanges and in wallets, yielding no interest,” according Founder Robert Leshner in a blog update about the funding announcement.
“…when Compound launches it’s [sic] first money markets on the Ethereum blockchain, individuals, institutions and applications will earn interest on Ether, stablecoins and utility tokens, with complete liquidity — similar to the overnight rate for dollars and government currencies.”
The core technology behind Compound is a decentralized blockchain infrastructure that is centered around a series of open-source smart contracts. As part of the smart contracts, the interest rates for each asset adjust dynamically in response to the borrowing demand for that asset. An algorithm makes these adjustments in real time, according to the project’s whitepaper.
Compound hopes to attract borrowers such as hedge funds, sophisticated speculators, and other Ethereum applications.
As Compound’s technology aligns closely with Coinbase’s entrenched status as a company that is revolutionizing traditional finance, it is no small wonder why it has received the firm’s backing. The company’s target market of institutional investors is in line with Coinbase’s recent rolling out of a suite of tools for only these clients, as CCN reported on May 15.
Compound’s core technology also eases reporting, since each money market is transparent, auditable, and completely predictable. Coinbase itself has also worked hard on institutional-grade reporting as part of efforts for becoming an SEC-regulated brokerage.
Coinbase closes Chicago operations
Popular cryptocurrency exchange, Coinbase are closing down their Chicago operations.
The office in Chicago was reportedly set to be planned on hiring as many as 100 people according to reports in May last year.
Coinbase, U.S.-based cryptocurrency exchange has announced the closure of it Chicago operations. The report detailed that the exchange are also to start scaling back on its plans to develop a new “matching engine” product to facilitate high-frequency trading for its clients.
Local news site Chicago Inno, had previously reported that the opening of the Chicago office in May last year, Coinbase were planning on hiring 100 people over three years, most of whom were going to be engineers.
A spokesperson from the company reportedly told Fortune that while the closure of the office is a setback, the exchange will be continuing to hire new employees in other offices. Furthermore, the spokesperson detailed that high-frequency trading is no longer a priority and that the company is focusing on new products.
Coinbase to Shut Down Chicago Office
Cryptocurrency exchange Coinbase is purportedly shutting down its Chicago office, due to lack of mainstream financial players, reported news portal Wall Street Journal.
In an interview with the news portal, Coinbase President and Chief Operating Officer Asiff Hirji said, “Coinbase laid off about 30 people in its Chicago office who had been working to improve the company’s technology to cater to speedy traders. The employees had been hired from local firms like futures exchange giant CME Group Inc. CME 0.01% and high-speed trader Jump Trading LLC.”
Hirji added Coinbase is focused on a growing business with financial institutions like hedge funds, endowments and family offices, rather than serving high-speed traders. A San Francisco-based team at Coinbase has sped up the firm’s matching engine by a factor of 20 compared with late 2017, when an influx of investor interest in bitcoin caused slowdowns and glitches at many crypto exchanges
The portal noted that high frequency trading or HFT plays a huge role in US stock markets. But often, they are regarded with suspicion by more traditional investors, who fear that HFT firms eat into their profits by zipping in and out of stocks while slower-moving players execute trades. Going against the grain, the exchange had upgraded their technology to attract ultrafast traders, including speeding up its matching engine, the system that brings together buy and sell orders.
Recently, the exchange was in the news when it announced that it was expanding its services to 11 countries, including India. The company had said, “One year ago, Coinbase served customers in 32 countries across two continents. Over the past 12 months, one of our main priorities has been to bring Coinbase services to people in all corners of the globe. Today we’re excited to welcome 11 more countries across Latin America and Southeast Asia to the cryptoeconomy by allowing customers to store, trade, send, and receive cryptocurrencies on Coinbase Pro and Coinbase.com — increasing the reach to 53 countries, spread across four continents.”
Apart from that, four-time Olympic Gold winner in tennis and one of the world’s most successful tennis player of all time, Serena Williams through one of her Instagram post revealed her investments in US cryptocurrency exchange Coinbase.
Coinbase closes its Chicago division, lays off 30 staff
In May 2018, Coinbase announced the opening of an office in Chicago as part of its ambitious plan to expand its service offerings and exploit the city’s financial expertise. Now, however, the company has announced it’s abandoning those plans and laying off 30 engineers.
The Chicago division, known as Coinbase Markets, was dedicated to the creation of sophisticated electronic markets technologies such as matching engines and high-frequency trading for crypto.
A Coinbase spokesperson told CoinDesk:
“To become the ‘Google of crypto’ we have to be comfortable making big bets. Some of them will be audacious and some of them won’t work out.”
Coinbase Markets opened to much excitement last year. A blog postat the time explained that the Chicago office would provide “access to a large talent pool of engineers with deep exchange infrastructure experience” and “enable us to continue offering the most performant and reliable cryptocurrency exchange.”
The spokesperson added that a handful of the Chicago engineers not associated with the matching engine will remain with Coinbase. Further, Coinbase has stated it would be looking into relocating several of the matching engine employees to San Francisco.
The spokesperson stated that the technology developed by Coinbase Markets will remain with Coinbase and may be integrated into the company’s technology:
“The team built some amazing technology and it could be used to influence the future development of our matching engine.”