Coinbase Revives Stablecoin Bootstrap Fund, Selects Four DeFi Protocols for Liquidity Deployment

On August 12, 2025, Coinbase revived its Stablecoin Bootstrap Fund, last active in 2019, to inject proprietary capital into leading DeFi protocols. Managed by Coinbase Asset Management, the initiative targets Aave and Morpho on Ethereum and Kamino and Jupiter on Solana, with the goal of strengthening liquidity, reducing slippage, and accelerating adoption of USDC and EURC. Unlike a traditional investment fund, this is a strategic liquidity program that uses Coinbase’s balance sheet to support decentralized markets, positioning USDC as a stablecoin of choice amid a broader DeFi rebound.

• Liquidity push: Coinbase is channeling its own capital, not outside investors’, into Aave, Morpho, Kamino, and Jupiter to improve lending depth and trading efficiency.
• Stablecoin strategy: USDC already supports ~$8.9B in DeFi TVL with $2.7T annual volume, and EURC expansion could broaden cross-border usage.
• Market timing: DeFi TVL has nearly doubled since April 2025 to ~$160–200B, signaling renewed growth potential.
• Precedent: Coinbase’s 2019 fund helped bootstrap Compound, dYdX, and Uniswap, cementing USDC’s early adoption.
• Open questions: Capital size, allocation per protocol, and future expansion remain undisclosed, leaving stakeholders to track impacts on borrowing costs, slippage, and TVL growth.

Cryptocurrency exchange Coinbase has revived its Stablecoin Bootstrap Fund for the first time since 2019, channeling its own capital into selected decentralized finance (DeFi) protocols to deepen liquidity and reinforce adoption of stablecoins like USDC and EURC.

The relaunch, announced by Coinbase Chief Business Officer Shan Aggarwal on August 12, 2025, is being managed by Coinbase Asset Management. It targets four initial platforms: Aave and Morpho on Ethereum, alongside Kamino and Jupiter on Solana. These placements aim to boost lending efficiency and trading liquidity across established and emerging DeFi ecosystems.

A Strategic Liquidity Play, Not an Investment Fund

Although the program is labeled as a “fund,” it’s not a public investment vehicle. Instead, Coinbase uses its own balance sheet to inject stablecoin liquidity, much like a bank providing support to financial markets. This distinction was clarified in the company’s announcement, stating that the term “fund” is employed for branding rather than implying external participation.

Why These Protocols, and Why Now?

Coinbase has not detailed its selection criteria, but the move aligns with broader DeFi recovery and growth trends. As of today, USDC commands around $8.9 billion in Total Value Locked (TVL) across DeFi platforms, with an impressive $2.7 trillion in annual on-chain volume. At the same time, the broader DeFi TVL has nearly doubled since April to approximately $160-$200 billion, though it remains below its 2021 high.

By targeting Aave and Morpho, Coinbase aims to support lending depth, drive competitive rates, and minimize slippage in USDC markets. On Solana, Kamino and Jupiter are positioned to enhance token swaps and cross-currency routing, especially for EURC users.

Coinbase frames the relaunch as timely: “On-chain financial services are at an inflection point,” due in part to DeFi demand increases and regulatory clarity improvement with the GENIUS Act and other legislation.

Drawing from 2019’s Proven Blueprint

The original Bootstrap Fund of 2019 delivered $1 million in liquidity apiece to Compound and dYdX, followed by contributions to Uniswap and PoolTogether. Those early injections helped cement the USDC stablecoin as a trusted medium in DeFi’s infancy, and a real competitor to the offshore owned USDT.

What Coinbase Has Confirmed; and What Remains Undisclosed

Coinbase has made clear that:

• The fund is being scaled gradually, with potential expansion to other stablecoins and protocols.

• Developers, including pre-launch teams, are encouraged to reach out for liquidity support.

However, the company has not revealed:

• The total capital allocated or exact amounts per protocol.

• Transparency on how selection decisions are made or prioritized among applicants.

Final Thoughts

Coinbase’s decision to reactivate its Stablecoin Bootstrap Fund marks a strategic step in reinforcing USDC and EURC’s roles in DeFi. By leveraging proprietary capital, Coinbase is reshaping how liquidity incentives can accelerate adoption without issuing public offerings or relying on grants. The company’s investments in Uniswap and dYdx have paid off handsomely in recent times, particularly as Coinbase integrates DEX platforms into its BASE app.

While the initial placements are promising, stakeholders will want to see:

• Whether the fund expands and how selection becomes structured.

• The actual impact on borrowing cost stability, slippage reduction, and TVL growth.

• How the initiative shapes DeFi’s trajectory over the coming cycles, especially as regulatory frameworks evolve.