Yesterday, Binance just released Binance Alpha2.0, allowing CEX users to purchase any DEX token directly from CEX without the need for withdrawal. CZ also commented, "I believe other CEXs will follow suit, and DEX trading volume will also increase." Following that, Coinbase made its move as well.

Last night, Coinbase announced the launch of Verified Pools, a set of rigorously screened liquidity pools. Users holding Coinbase Verifications certification credentials can seamlessly conduct on-chain transactions, linking their Prime Onchain wallet, Coinbase wallet, or other third-party wallets to Coinbase verification credentials for trading, addressing the opacity issue of traditional liquidity pools.

The Verified Pools are based on the Uniswap v4 protocol on the Base network and leverage a hooks mechanism to achieve customizable smart contract functionality. Additionally, they have partnered with DeFi research and risk management company Gauntlet to optimize liquidity pool configuration and ensure the overall health of the liquidity pool.

In the official announcement, Verified Pools are characterized as another important step taken by Coinbase to promote the mainstream adoption of on-chain applications. However, what surprised users in the Base community the most was that the Verified Pools are based on Uniswap V4 rather than Aerodrome, Base's largest on-chain DEX application. Some even referred to this behavior as a "betrayal" of Aerodrome.

Aerodrome is ranked first in TVL on Base; Image Source: DeFiLlama

So why did Coinbase's Verified Pool choose Uniswap instead of Aerodrome?

Compliance First, Uniswap is a More Cost-Effective Choice

There are many people who do not understand Coinbase's approach, and even Sonic founder Andre Cronje questioned, "I'm really a bit puzzled. Aerodrome and Alex have always been the most steadfast supporters and advocates of Base. This could have been built entirely on Aerodrome. Isn't supporting your builders a motto?"

In response to these questions, Aerodrome co-founder Alexander Cutler stated, "We discussed this with them in the early stages of development and are fully capable of incorporating the same functionality — it just wasn't a priority at the time, but we will definitely pay attention to its adoption."

He mentioned that Coinbase approached Aerodrome for a collaboration in the verification pool last summer, but the verification pool's product-market fit still had many unresolved issues, so Aerodrome chose a larger opportunity as a priority target at that time.

The core of Coinbase's verification pool lies in its on-chain Credential system tied to KYC authentication. Uniswap V4's hooks mechanism can be customized to only allow LPs verified through Coinbase's KYC to participate, directly addressing regulatory compliance issues.

Uniswap V4's hooks are essentially a smart contract "plugin system," allowing developers to customize pool creation rules, fee structures, and permission management. This flexibility enables Coinbase to quickly deploy a whitelist access mechanism in line with its compliance framework and achieve strong binding of LP identities through the on-chain Credential system.

Related Read: "When Binance Launchpool Meets Uniswap V4, Whose Ace Is Bigger?"

As Aerodrome, being the native DEX on the Base chain, positions itself as a "liquidity hub," its underlying codebase does not natively support such complex permission layering designs. Even if achieved through forking or refactoring in the future, the development cycle and testing costs would 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 of the Base chain, its permissionless, highly autonomous protocol features conflict fundamentally with Coinbase's regulatory framework. If Aerodrome were to be directly integrated, Coinbase would bear the associated responsibility of protocol vulnerabilities, money laundering risks, and even regulatory scrutiny. In contrast, Uniswap V4's modular design allows Coinbase to gradually test the waters through a controlled KYC segregated pool, avoiding regulatory minefields while leveraging the brand credibility and liquidity network of Uniswap.

Alexander Cutler also acknowledges that it is "technically feasible," but explicitly states that prioritizing features like dynamic fee optimization that do not require permissioned pools is higher on the agenda.

In a reply to someone else's tweet, he wrote, "There are still many questions about how permissioned pools can gain enough traction to become a viable alternative to permissionless pools. If it truly gains market acceptance, we are ready to support it at any time. However, in the short term, it is unlikely to surpass opportunities like dynamic fees."

This choice reflects Aerodrome's preference to serve existing DeFi-native users rather than cater to Coinbase's compliance experiment. On the other hand, Coinbase's goal is to explore on-chain compliant trading scenarios through the validation pool and gradually migrate CEX users to on-chain, a path that requires instant usability and low compliance risk, with Uniswap V4 providing a readily available technical interface.

Experimental Nature Over PMF

For some, whitelist pools as one of the applications of Uniswap V4 was already anticipated, with Coinbase's validation pool being a practical implementation of this idea. The most direct contradiction lies in the high overlap of target users—institutional LPs on the Coinbase order book and compliant buyers are already accustomed to the low-friction environment of centralized trading platforms.

If on-chain concentrated liquidity merely replicates the order book functionality of CEX, users lack the incentive to migrate—on-chain transaction gas costs, price slippage, and operational complexity remain higher than CEX, with traditional users relying more on CEX for instant settlement, fiat channels, and customer support. Even if the validation pool can offer slightly higher market-making returns, liquidity fragmentation may reduce capital efficiency, leading to a "compliance premium that is difficult to cover migration costs" dilemma.

A deeper challenge comes from the liquidity allocation paradox. If the validation pool focuses on Coinbase's unlisted assets, it will fall into a "chicken and egg" cycle: the high-risk nature of unaudited assets conflicts inherently with the conservative positioning of the compliance pool, while funds seeking Alpha tend to favor early assets of permissionless pools. This could turn the validation pool into a "compliance buffer zone" for market makers—earning fees through liquidity provision rather than capturing asset appreciation.

Even if unlisted assets are allowed into the pool, the question remains whether they can become an "onboarding transition channel." As a publicly traded company, Coinbase's strict asset auditing standards will not be relaxed due to the presence of on-chain pools but may even tighten further due to compliance pressure.

Despite Coinbase's on-chain credential-linked KYC identity, ZachXBT once revealed a systemic vulnerability: The dark web could exploit/purchase KYC information to fabricate a "compliant identity" and inject tainted funds. If a hacker were to sell illicit ETH to a liquidity pool via a market maker, the disparity between on-chain anonymity and CEX risk control capabilities could lead to the entire pool being flagged as a "tainted asset pool," triggering regulatory scrutiny. More subtly, arbitrage bots still rely on market makers to balance prices, but the risk control capabilities of market makers are far inferior to those of centralized CEX systems, ultimately potentially shifting the risk to ordinary users.

In the short term, the liquidity pool seems more like an "on-chain feasibility study report" – reusing Uniswap V4's hooks mechanism to build a minimal compliance model, testing regulatory tolerance and user behavior data; in the medium term, the plan is to iterate the interactive interface developed for this into a standard on-chain transaction tool, paving the way for future integration of permissionless pools; the long-term goal is still to blur the boundaries between CEX and DEX, gradually realizing Brian Armstrong's vision of "on-chain/off-chain liquidity convergence."

However, whether this experiment can cross the "sandbox-to-reality" chasm depends on two key variables: First, whether the U.S. SEC will consider such pools as a "quasi-securities trading platform," and second, whether the speed at which CEX users migrate to the chain can support liquidity density. At the current stage, it is too early to assert its success or failure.

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