Coinbase launches Binance Alpha 2.0 competitor, but Base leading DEX is "backstabbed"

Here is the English translation of the text, with the specified terms retained and not translated: Yesterday, Binance just updated Binance Alpha2.0, allowing CEX users to purchase any DEX token directly from the CEX without the need for withdrawal. CZ also commented that "I think other CEXs will follow suit, and the trading volume of DEXs will also increase." Immediately after, Coinbase also made a move. Last night, Coinbase announced the launch of the "Verified Pools", a set of strictly screened liquidity pools where users with Coinbase Verifications can seamlessly conduct on-chain transactions by connecting their Prime Onchain wallet, Coinbase wallet, or other third-party wallets with their Coinbase verification credentials, solving the problem of the lack of transparency in traditional liquidity pools. The "Verified Pools" are based on the Uniswap v4 protocol on the Base network, and also utilize the hooks mechanism to realize customizable smart contract functions. In addition, it collaborates with the DeFi research and risk management company Gauntlet to optimize the configuration of the liquidity pools and ensure the overall health of the liquidity pools. In the official announcement, the Verified Pools are characterized as another important initiative by Coinbase to promote the widespread adoption of on-chain applications. However, what surprised the users who are focused on the Base community is that the Verified Pools are based on Uniswap V4 rather than Aerodrome, the largest DEX application on the Base chain. Some even described this as a "backstab" to Aerodrome.

Aerodrome ranks first in TVL on Base; Source: DeFiLlama

So why did Coinbase's Verified Pools choose Uniswap instead of Aerodrome? # Compliance First, Uniswap is a Higher Cost-Performance Choice For Coinbase's approach, many people do not understand it. Even Sonic founder Andre Cronje questioned, "I'm a bit confused, Aerodrome and Alex have always been the staunchest supporters and advocates of Base, so this could have been built on Aerodrome. Isn't supporting your builders just a slogan?" In response to these questions, Aerodrome co-founder Alexander Cutler said, "We talked to them in the early development stage, and we were fully capable of adding the same functionality - it just wasn't a priority at the time, and we'll certainly be watching its adoption." He said Coinbase had approached Aerodrome to collaborate on the Verified Pools last summer, but the product-market fit (PMF) of the Verified Pools still had many unresolved issues, so Aerodrome chose to prioritize larger opportunities at the time. The core of Coinbase's Verified Pools lies in its on-chain credential system and its binding with KYC certification. The hooks mechanism of Uniswap V4 can be customized to only allow LPs who have passed Coinbase's KYC to participate, directly addressing the regulatory compliance issue. Uniswap V4's hooks are essentially a "plugin system" for smart contracts, allowing developers to customize the creation rules, fee structure, and permission management of the liquidity pools. This flexibility allows Coinbase to quickly deploy a whitelisted access mechanism that fits its compliance framework, and achieve strong binding of LP identities through the on-chain credential system. As the native DEX on the Base chain, although Aerodrome is positioned as the "liquidity hub", its underlying codebase does not natively support such complex permission layering designs. Even if it is implemented in the future through forking or transformation, its development cycle and testing costs will be significantly higher than directly adopting Uniswap's mature solution. As a publicly listed company, Coinbase has an extremely low tolerance for compliance risks. Although Aerodrome is the native DEX on the Base chain, its permissionless and highly autonomous protocol features are fundamentally at odds with Coinbase's regulatory framework. If directly integrated with Aerodrome, Coinbase would have to bear the joint liability of protocol vulnerabilities, money laundering risks, and even regulatory scrutiny. In comparison, Uniswap V4's modular design allows Coinbase to gradually experiment through a controllable KYC-isolated pool, both avoiding regulatory minefields and leveraging Uniswap's brand credibility and liquidity network. Alexander Cutler also acknowledged that it is "technically feasible", but clearly stated that they will prioritize features such as dynamic fee optimization that do not require permission. He wrote in a reply to someone's tweet, "There are still many questions about how permissioned pools can gain enough appeal to become a viable alternative to permissionless pools. If it does gain market recognition, we can always join in support. But in the short term, it is unlikely to surpass opportunities like dynamic fees." This choice reflects that Aerodrome is more inclined to serve the existing DeFi native users, rather than catering to Coinbase's compliance experiments. In contrast, Coinbase's goal is to explore on-chain compliant trading scenarios through the Verified Pools, and gradually migrate CEX users to the chain - this path requires immediate availability and low compliance risk, which Uniswap V4 happens to provide a ready-made technical interface for. # More Experimental than PMF In the eyes of some, the whitelist liquidity pool as one of the application scenarios of Uniswap V4 has long been expected, and Coinbase's Verified Pools are just the practical implementation of this idea. The most direct conflict lies in the high overlap of target users - the institutional LPs on Coinbase's order book and compliant buyers are already accustomed to the low-friction environment of centralized trading platforms. If the on-chain concentrated liquidity merely replicates the order book function of CEXs, users lack the motivation to migrate - the gas cost, price slippage, and operational complexity of on-chain trading are still higher than CEXs, and traditional users rely more on CEXs' instant settlement, fiat channels, and customer support. Even if the Verified Pools can provide slightly higher market-making returns, liquidity fragmentation may reduce capital efficiency, forming a "compliance premium cannot cover migration costs" dilemma. The deeper challenge comes from the paradox of liquidity allocation. If the Verified Pools focus on assets not yet listed on Coinbase, they will fall into the "chicken and egg" cycle: the high-risk nature of unlisted assets and the conservative positioning of the compliant pool are naturally in conflict, and funds pursuing Alpha tend to prefer permissionless pools for early assets. This may relegate the Verified Pools to become a "compliance buffer zone" for market makers - earning trading fees by providing liquidity, rather than capturing asset appreciation dividends. Even if unlisted assets are allowed to enter the pool, whether they can become a "transition channel for listing" is still questionable. As a publicly listed company, Coinbase's strict asset review standards will not be relaxed due to the existence of on-chain pools, but may even be further tightened due to compliance pressures. Although Coinbase binds KYC identities through on-chain credentials, ZachXBT has previously revealed a systemic vulnerability: the risk of black markets forging "compliant identities" by purchasing/stealing KYC information to inject dirty money still exists. If hackers sell illegally obtained ETH through market makers to the Verified Pools, the gap between on-chain anonymity and CEX risk control capabilities may result in the entire pool being marked as a "polluted asset pool", triggering regulatory scrutiny. More subtly, arbitrage bots still need to rely on market maker channels to balance prices, but market makers' risk control capabilities are far inferior to the centralized systems of CEXs, ultimately shifting the risk to ordinary users. In the short term, the Verified Pools are more like a "on-chain feasibility research report" - reusing Uniswap V4's hooks mechanism to build a minimum compliant model, testing regulatory tolerance and user behavior data; in the medium term, they plan to iterate the interaction interface developed for this into a standard on-chain trading tool, paving the way for future integration of permissionless pools; the long-term goal is still to blur the boundaries between CEXs and DEXs, gradually realizing Brian Armstrong's vision of "on-chain-off-chain liquidity unification". However, whether this experiment can cross the "sandbox-landing" chasm depends on two key variables: one is whether the US SEC will view such pools as "de facto securities trading platforms", and the other is whether the migration speed of CEX users to the chain can support liquidity density. At the current stage, it is too early to assert its success or failure.