Is it time for Coinbase to retire their Digital Asset Framework?

Since Coinbase was founded, the San Francisco-based exchange has become a poster-child for what a well-regulated, “clean” cryptocurrency exchange should look like. Up until two months ago, Coinbase has been relatively conservative with the coins it decides to list on its exchange, forgoing rapid growth for regulated expansion. This conservatism gave Coinbase what was essentially a stamp of approval, in that whatever coin that Coinbase list must be legitimate. If your coin gets listed on Binance, you get volume, but if your coin gets on Coinbase, you get the blessed halo of a squeaky clean exchange.

While taking a measured approach to listing coins has worked out so far for Coinbase — hackers have not successfully attacked it nor have regulators threaten to shut it down — its users greeted its conservatism with dissatisfaction. Just visit any social media post by Coinbase, and you will see an army of people (or bots) pushing for Coinbase to list their coins.

On November 2, 2017, in response to criticisms about its decision-making process, Coinbase released its “Digital Asset Framework,” a six section framework laying out the factors that Coinbase looks at before listing a coin. While Coinbase added a caveat that the framework “is not intended to be a definitive methodology, investment advice, or a commitment to support any specific asset,” many crypto startups and users took to various social media channels made attempts to structure their coins under that framework.

A few months after the Digital Asset Framework announcement, research publication Diar released a piece analyzing the potential coins that may get listed on Coinbase. One specific coin that Diar examined was Ethereum Classic. For Ethereum Classic, Diar noted is that “Coinbase…may find concern with the Ethereum Foundations holding of 10% of the supply. And if that’s not a concern, the 40–45% trading volume on exchange OKEx alone, might be.”

Ethereum Classic, in this case, wouldn’t meet the framework’s Exchange Volume Distributionrequirement which states that “if secondary markets exist, then volume [for a coin] should be relatively distributed across exchanges” — its trading volume at that time was far from distributed. Yet, a few months after Diar’s report, Coinbase announced that it is supporting Ethereum Classic for trading.

After the Ethereum Classic announcement, Coinbase started to ramp up its coin listing, adding a total of seven new assets in a span of roughly three months, adding that, it is looking to explore support for over 30 new assets. Some recent additions were questionable — if we take the Digital Asset Framework at face value. For example, it is unclear whether or not Loom Network has a “demonstrable record of responding to and improving the code after a disclosure of vulnerability,” — the project just recently launched its first external testnet last month. Nor is it clear that district0x has a “plan or built-in mechanism for raising, rewarding, or allocating funds to future development, beyond the funds raised from the ICO or traditional investors.” (To the district0x team’s credit they have set aside funding for future development, but those funds still come from their initial token sale).

So that brings us to the question: If the Digital Asset Framework is not a “definitive methodology” and if Coinbase does not appear to use it to determine coin listing, why does it still exist? Why continue this charade? If Coinbase is not going to use it and projects aren’t going to derive value from it, isn’t it time do with it what we do with our neglected college theses — put it in our cabinets and forget that it even exists?

The post Is it time for Coinbase to retire their Digital Asset Framework? appeared first on The Block.

Is it time for Coinbase to retire their Digital Asset Framework? written by Steven Zheng @ December 18, 2018 Steven Zheng

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