Coinbase's 2025 Expansion: Strategic Catalysts for DeFi and Layer 1 Adoption on Ethereum and Solana

Coinbase's 2025 expansion into Ethereum and Solana-based cryptocurrencies is not merely a diversification play—it is a calculated strategy to accelerate decentralized finance (DeFi) growth and solidify Layer 1 adoption. By leveraging strategic partnerships, infrastructure upgrades, and a rigorous listing process, the exchange is reshaping the crypto landscape. This analysis unpacks the catalysts driving this momentum and their implications for investors.

DeFi Growth: Partnerships and Product Launches

Coinbase's collaboration with Squads, a Solana-based DeFi infrastructure provider, exemplifies its focus on liquidity and utility. By designating USDC as the default stablecoin across Squads' products—including Altitude, Fuse, and Grid—Coinbase is deepening Solana's role as a hub for DeFi innovation. Squads has already secured $1 billion in USDC, representing 15% of the total supply on SolanaCoinbase & Squads Ignite USDC Expansion on Solana^[1]. This partnership aligns with Coinbase's relaunched Stablecoin Bootstrap Fund, which aims to bolster liquidity across DeFi protocolsCollaboration Between Coinbase and Squads Accelerates USDC^[2].

On Ethereum, Coinbase's Base network is streamlining compliance through identity attestation via the Ethereum Attestation service. Over 300,000 wallets have been verified, enabling seamless interactions with dAppsCoinbase sees infinite interoperability potential with^[3]. Base's integration of the Ethereum Virtual Machine (EVM) and USDC further enhances interoperability, positioning it as a scalable solution for tokenized assets. Additionally, Coinbase's smart wallet initiative—which replaces private keys with passkeys and biometric authentication—lowers entry barriers for mainstream usersSolana Network Boosted by Coinbase’s Major Infrastructure^[4].

Layer 1 Adoption: Solana's Infrastructure and Ethereum's Ecosystem

Coinbase's infrastructure upgrades for Solana have been transformative. Asynchronous transaction processing and bare metal servers for RPC calls have improved block throughput by fivefold and RPC performance by fourfoldCoinbase Exchange Implements Major Upgrade to^[5]. These enhancements address historical issues like network outages, making Solana more attractive to institutions. For example, the launch of Solana ETFs in Canada has further fueled optimismCoinbase Exchange Implements Major Upgrade to^[5].

Solana's native scalability—enabled by its proof-of-history (PoH) mechanism—allows it to process up to 65,000 transactions per second, outpacing Ethereum's Layer 2 solutionsSolana (SOL): Native scalability - Coinbase^[6]. Coinbase CEO Brian Armstrong has committed to providing tier-1 support for Solana, matching the level of service offered to Bitcoin and EthereumCoinbase CEO Plans Tier-1 Solana Support After^[7]. This includes sub-one-second transaction speeds and sub-one-cent costs, aligning with Coinbase's broader strategy to embrace multiple Layer 1 blockchainsCoinbase Plans to Integrate with Solana for Lightning-Fast, Cost^[8].

On Ethereum, Coinbase's focus remains on Layer 2 adoption. The Base network reduces gas fees and speeds up transactions, making it viable for everyday use. By sponsoring gas fees for dApps like Moonwell, Coinbase is removing cost barriers for usersHow Coinbase and Ethereum Improvement Proposals (EIPs) Are^[9]. Meanwhile, institutional interest in Ethereum-based DeFi is surging: 83% of institutional investors plan to increase digital asset allocations in 2025, with derivatives and staking use cases gaining tractionGrowing enthusiasm and adoption of digital assets^[10].

Market Impact: The Coinbase Effect and Institutional Momentum

The Coinbase Effect—a phenomenon where tokens experience price surges post-listing—has been amplified in 2025. Recent additions like Centrifuge (CFG) on Ethereum and TROLL on Solana have seen liquidity and visibility spikesCoinbase to List 2 New Cryptocurrencies on Ethereum and Solana^[11]. Tokens like Bitcoin Hyper (HYPER) and Maxi Doge (MAXI) are also under watch for potential listings, given their cross-chain utility and community-driven models12 New & Upcoming Coinbase Listings^[12].

Coinbase's derivatives segment underscores its growing influence: $1 trillion in notional volume was recorded in Q2 2025, up from $800 billion in Q1Coinbase at Oppenheimer Conference: Strategic Growth and Challenges^[13]. Strategic partnerships, such as the expansion of PayPal USD (PYUSD) and collaboration with PNC Bank, are further integrating stablecoins into traditional financePayPal and Coinbase Expand Partnership to Drive Innovation of Stablecoin-based Solutions^[14]. These moves are critical for scaling DeFi's reach beyond crypto-native users.

Future Outlook: Regulatory Expansion and Emerging Tokens

Coinbase's regulatory licenses in Europe, Argentina, India, and Singapore signal its intent to globalize DeFi adoptionPNC Bank, Coinbase Announce Strategic Partnership to Advance Digital Asset Solutions and Expand Banking Services^[15]. Meanwhile, projects like Solaxy (SOLX) and BTC Bull Token (BTCBULL)—with strong presale performance and utility—could see listings in 2025Upcoming Coinbase Listings 2025 – New Coins to Watch - Bitcoinist^[16]. However, challenges remain: Solana's network outages and Ethereum's gas fees highlight the need for continued innovation.

Conclusion

Coinbase's 2025 expansion is a masterstroke for DeFi and Layer 1 adoption. By prioritizing Solana's speed and Ethereum's institutional depth, the exchange is creating a dual ecosystem that caters to both retail and institutional demand. For investors, this means opportunities in emerging tokens, infrastructure upgrades, and cross-chain innovations. As the crypto market matures, Coinbase's strategic bets will likely define the next phase of blockchain adoption.