Last updated: September 24, 2018

Coinbase Digital Asset Framework

Every day, projects around the world are issuing new blockchain assets of all types. We’re striving to give quality projects access to quality customers who have chosen Coinbase as their preferred platform to buy, sell, store and use cryptocurrency.

1.0

Coinbase Mission & Values

1.1

Open Financial System

Open financial system is defined as being available to everyone and not controlled by a single entity.

Innovation or Efficiency Gains

New or improved technology which helps solve a problem, creates a new market, addresses an unmet market need, or creates value for network participants.

Economic Freedom

A measure of how easy it is for members of a society to participate in the economy. The technology enables individuals to have more control over their own wealth and property, or the freedom to consume, produce, invest, or work as they choose.

Equality of Opportunity

This technology is accessible to use by anyone with a smartphone or access to the internet. It contributes to the broader mission of building the on-ramps to Finance 2.0.

Decentralization

The network is public, decentralized, and enables trustless consensus.

2.0

Technology

2.1

Security & Code

Assessment of engineering and product quality.

Source Code

Open-source code, well-documented peer-review, and testing by contributors separate from the initial development team on GitHub, etc.

Prototype

There is a working alpha or beta product on a testnet or mainnet.

Security & Code

Demonstrable record of responding to and improving the code after a disclosure of vulnerability, and a robust bug bounty program or third party security audit.

2.2

Team

Assessment of short-term operating expectations and decision making.

Founders and Leadership

Able to articulate vision, strategy, use cases or drive developmental progress. Has a track record of demonstrable success or experience. If information is available, Coinbase will apply "know your client" standards to publicly visible founders or leaders.

Engineering

Assessment of the engineering team and their track record of setting and achieving deadlines.

Business & Operations

History of interacting with the community, setting a reasonable budget and managing funds, and achieving project milestones. Thoughtful cash management is a key driver of the project's long term viability.

Specialized Knowledge and Key People

The project leadership is not highly centralized or dependent on a small number of key persons. Specialized knowledge in this field is not limited to a small group of people.

2.3

Governance

Assessment of long-term operating expectations and decision making.

Consensus Process

There is a structured process to propose and implement major updates to the code, or there is a system or voting process for conflict resolution.

Future Development Funding

There is 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.

White Paper

Justifies the use case for a decentralized network and outlines project goals from a business and technology perspective. While a white paper is important for understanding the project, it is not a requirement.

2.4

Scalability

Assessment of a network's potential barriers to scaling and ability to grow and handle user adoption.

Roadmap

Clear timeline with stages of development, reasonable project milestones, or built-in development incentives.

Network Operating Costs

The barriers to scaling the network have been identified, or solutions have been proposed or discussed. The resource consumption costs for validators and miners are not the main deterrents to participation.

Practical Applications

There are examples of real-world implementation or future practical applications.

Type of Blockchain

The asset is a separate blockchain with a new architecture system and network, or it leverages an existing blockchain for synergies and network effects

3.1

Regulation

Can Coinbase legally offer this asset?

US Securities Law

The asset is not classified as a security using Coinbase's Securities Law Framework.

Compliance Obligations

The asset would not affect Coinbase or Coinbase's ability to meet compliance obligations, which include Compliance Obligations, Anti-Money Laundering (AML) program and obligations under government licenses in any jurisdiction (e.g. Money Transmitter Licenses).

3.2

Integrity & Reputational Risk

Would listing the asset be inconsistent with Coinbase policy?

User Agreement

The asset, network, application or fundamental nature of the project does not constitute a Prohibited Business under Appendix 1 of the user Agreement.

4.0

Market Supply

4.1

Liquidity Standards

How liquid is this asset?

Global Market Capitalization

How does the market capitalization compare to the total market capitalizations of other assets?

Asset Velocity

Trade velocity, or turnover, is a significant part of market capitalization. This is a measure of how easily the asset can be converted to another asset.

Circulation

For service or work tokens, new supply is created through consensus protocols. If the supply is capped, then a material amount of the total tokens should be available to the public.

4.2

Global Distribution

Where is this asset available to trade?

Total # of Exchanges

The number of exchanges that support the asset.

Geographic Distribution

The asset is not limited to a single geographic region and is available to trade on decentralized exchanges.

Fiat and Crypto Pairs

Fiat and crypto trading pairs exist.

Exchange Volume Distribution

If secondary markets exist, then volume should be relatively distributed across exchanges.

5.0

Market Demand

5.1

Demand

What is driving demand for this asset and does it lead to stronger network effects?

Consumer Demand

Customer demand is carefully considered, however, any asset which is created from a fork, airdrop, or automated token distribution is subject to a separate set of criteria.

Developers and Contributors

Growing developer base and measured progress as defined by the number of repositories, commits, and contributors.

Community Activity

Dedicated forums are available where developers, supporters, users, and founders can interact and build a community and offer transparency into the project. The team provides regular updates or is responsive to feedback.

External Stakeholders

There are investments from venture firms or hedge funds which have experience working with crypto companies or projects. The project has corporate partnerships, joint ventures, or dedicated consortiums.

5.2

Network Standards

Rudimentary assessment of a growing network effect.

Change in Market Capitalization

The market capitalization has grown after the network has activated, demonstrating increased demand for the asset after the project's launch.

Nodes

Growing # of nodes on the underlying blockchain. The project has a globally distributed node network, meaning operating nodes are not contained in a single country or geographic region.

Transactions, Fees & Addresses

Growing # of transactions and fees paid over time. Growing # of asset or token holders, which is an indicator of asset distribution.

6.0

Cryptoeconomics

6.1

Economic Incentives

Are the economic structures designed to incentivize all parties to act in the best interest of the network?

Type of Token

It is a service, work, or hybrid token. Tokens backed by fiat or other physical assets are categorized as US securities and will not be considered at this time.

Token Utility

There is utility from obtaining, holding, participating, or spending the token. The team identifies a clear and compelling reason for the native digital asset to exist (i.e. the main purpose is not fundraising).

Inflation (Money Supply)

There is an algorithmically programmed inflation rate which incentivizes security and network effects. Or, if the total supply is capped, then a majority of the tokens should be available for trade when the network launches.

Rewards and Penalties

There are mechanisms (such as transaction fees) which incentivize miners, validators, and other participants to exhibit 'good' behavior. Conversely, there are mechanisms which deter 'bad' behavior.

6.2

Token Sale Structure

A small subset of what we believe are best practices for ICOs and indicators of the token's future ability. If the token did not have a sale, this section is not applicable.

Security

There is a focus on stringent security protocols and best practices to limit scams, hacks, and theft of funds.

Participation Equality

Best efforts by the team to allow a fair distribution of tokens (i.e. setting initial individual purchase caps to limit the risk of small number of investors from taking a majority of the supply).

Team Ownership

The ownership stake retained by the team is a minority stake. There should be a lock-up period and reasonable vesting schedule to ensure the team is economically incentivized to improve the network into the future.

Transparency

The team should be available and responsive to questions or feedback about the product, token sale, or use of funds across multiple forums.

Total Supply

The team should sell a fixed percentage of the total supply, and participants should know the percentage of total supply that their purchase represents, or have a clear understanding of the inflation rate.

Ethics or Code of Conduct

White paper or project website should have an ethical or professional code of conduct.