Hi everyone, thanks for being supporters of Moonwell and for all you do to help us grow on a daily basis. I have some great news to share: Coinbase is adding support for 4 new blue chip collateral assets on Base. They should launch very soon, in a matter of weeks:
https://x.com/CoinbaseAssets/status/1922387735580450838
The new collateral assets are:
- cbXRP - Coinbase wrapped XRP (Ripple)
- cbDOGE - Coinbase wrapped DOGE
- cbADA - Coinbase wrapped ADA (Cardano)
- cbLTC - Coinbase wrapped LTC (Litecoin)
Because these new wrapped assets will be minted in a similar way to cbBTC, they represent a unique opportunity for Moonwell to grow to support lending and borrowing assets that are custodied by Coinbase 1:1, with proof of reserves, and are more importantly instantly redeemable for the spot assets underlying them. As we’ve seen with the rapid growth and success of cbBTC, Coinbase’s track record of security is unparalleled, and the 1:1 fungibility means liquidators have greater certainty they will be able to sell any liquidated collateral on Coinbase’s deep liquidity CEX markets, which are just seconds away from Moonwell and Base.
In addition, due the nature of Coinbase’s early support for these spot assets on their exchange, there are millions of retail and institutional clients that combined hold tens if not hundreds of billions of $ in these assets, which have to date been simply sitting in user accounts, custodied in cold storage, for years.
Many of these users would love to earn more XRP, DOGE, ADA, and LTC by simply lending out their coins, or obtain leverage against them by borrowing stablecoins and other assets.
I’m not equipped to fully evaluate the quality of each asset, but let me say a few words about each of them:
- IMHO, Ripple/XRP is the strongest collateral asset as it is backed by a well-funded US development company, Ripple Labs, who has been developing the network for almost a decade. Ripple is well funded and provided a great service to our entire industry by successfully winning the lawsuits the SEC filed against them, at considerable legal expense. The project is also backed by Moonwell’s lead investor, Arrington Capital, and is a shining example of a successful US layer 1 network.
- Cardano/ADA is fostered by the IOHK Foundation and is well funded. It is an early proof of stake network that launched in 2017 that has properties many in the Bitcoin community desire. It is well funded and has an active development community.
- DOGE is a memecoin that is an almost direct fork of Bitcoin, with few modifications. While there is little to no active development on DOGE, it’s immutability and large holder base might make it one of the only memecoins that are safe to list as a collateral asset. DOGE can be volatile, but it’s liquidity on a large number of exchanges like Coinbase, Binance, OKX, ByBit, Upbit, etc. and it’s top 10 crypto asset status give it a unique place. For example, I looked at Coingecko just now and DOGE did over $3.1 billion in trading volume in the last 24 hours.
- IMHO Litecoin/LTC is the weakest of these collateral assets. Litecoin is a Bitcoin fork created by Charlie Lee, a former Coinbase employee, with a fixed supply of 84 million coins and a novel (at the time) Scrypt proof of work mining algorithm that is memory intensive and wasn’t easy to mine on GPUs. The Litecoin project has been abandoned for years and it is unclear to me if there is a team maintaining the software, however, the network continues to operate and it is currently ranked #26 on Coingecko, with a ~$7.75 billion market cap and a ~$705 million 24 hour trading volume.
I’d love to hear thoughts from the community as well as analysis from the risk curators about the potential to support these collateral markets. It is clear that Coinbase is bringing all of their dormant assets onchain, and this represents an exciting new opportunity for Moonwell to become the premier venue for lending and borrowing these and other top collateral assets.
Moonwell could support these assets in a variety of ways:
- New core markets for these assets would be the obvious first step, as our core assets are the most flexible on Base and enable you to borrow any collateral against them, including the biggest native Base tokens like AERO, VIRTUAL, MORPHO, and WELL.
- Moonwell Flagship and Frontier vaults could also supply borrowable liquidity, including USDC, ETH, EURC, and cbBTC into new isolated Morpho markets.
Price Feeds
Chainlink has price feeds for all of the above assets, however, only the DOGE/USD feed is currently available on Base. It is likely that Chainlink will move to enable these feeds on Base prior to the asset avialability, so I don’t believe lack of price feeds will be an issue.
DEX Liquidity
While Coinbase has not indicated whether or not they will incentivize DEX liquidity on Base, I believe the early liquidity will be strong simply due to the high Aerodrome incentives and the veAERO voting power that Coinbase Ventures currently holds, which can easily be directed towards new pools for these assets. I would expect DEX liquidity to grow rapidly.
Conclusion
I believe this is a unique opportunity for the Moonwell community and protocol to rapidly grow and provide leverage for millions of users and tens, if not hundreds of billions of dollars in some of the top crypto collateral assets. It’s a great day to be building on Base, as together with Coinbase and all the other strong protocols in the ecosystem such as Aerodrome, Morpho, and Virtuals, we’re building the largest onchain economy in the world. This is how we grow to surpass even L1 mainnet someday. Let’s go!