In a significant move this week, leading cryptocurrency exchange Coinbase has introduced its innovative Onchain Payment Protocol, an open-source initiative designed to enhance its Commerce product catering to merchants.
The San Francisco-based exchange disclosed this development on Thursday, positioning the protocol as a means to facilitate “instant settlement, low fees, and broad asset support” for merchants leveraging Coinbase’s services. Initially introduced in 2018, Coinbase Commerce serves as a platform enabling merchants worldwide to accept cryptocurrency payments. According to the company, thousands of global merchants have processed billions of dollars in on-chain payments through this platform.
Despite its success, challenges such as cryptocurrency volatility and complex user experiences have hindered broader adoption. Coinbase’s freshly launched open-source protocol addresses these concerns by automatically converting customers’ cryptocurrency payments into the widely used stablecoin USDC, thereby mitigating exposure to market volatility. Presently, the protocol supports Ethereum, Polygon, and the Coinbase-incubated Base, with plans for expansion to additional networks in the near future.
Merchants stand to gain from significantly reduced payment processing fees by accepting cryptocurrencies directly, as opposed to traditional credit card payments. Moreover, the open-source nature of the protocol fosters an environment for other platforms to integrate and innovate upon Coinbase’s infrastructure.
This development coincides with Coinbase’s proactive efforts to establish its Layer 2 network, Base, signaling the company’s commitment to securing a strong foothold in the dynamic decentralized finance (DeFi) space.
