Important takeaways
- Coinbase’s Bitcoin-backed loans, powered by Morpho, provide USDC instantly and leverage cbBTC for seamless on-chain functionality.
- This new offering follows Coinbase’s exit from the lending program in November 2023, signaling a renewed focus on Bitcoin lending.
Coinbase has introduced Bitcoin-backed loans through its partnership with Morpho, a decentralized finance protocol with $3.7 billion in total value locked up.
This new service allows users to borrow up to $100,000 in USDC instantly without selling their Bitcoin.
The service represents Coinbase’s return to Bitcoin lending after ending its previous lending program in November 2023, which had offered cash loans backed by BTC holdings.
Users’ Bitcoin collateral is converted to Coinbase-wrapped Bitcoin (cbBTC) at a 1:1 ratio with no fees and transferred to Morpho. The protocol then sends USDC loans directly to users’ Coinbase accounts in less than a minute.
The loans require a minimum collateral ratio of 133%, with borrowers able to adjust their loan-to-value (LTV) above this threshold.
Collateral is liquidated if the loan balance reaches 86% of the collateral’s market value, triggering repayment and penalties, with remaining Bitcoin returned to the borrowers.
Interest rates are set by Morpho and automatically adjust to market conditions, updating every few seconds with each block creation on the Base blockchain.
The service has no minimum payments or fixed maturity dates, provided borrowers maintain appropriate LTV ratios.
The service is available across the US except New York, with Coinbase planning a wider expansion. Although currently limited to Bitcoin security, the exchange plans to add support for other tokens.
