Key Takeaways
- Coinbase’s Bitcoin-backed loans, powered by Morpho, provide USDC instantly, leveraging cbBTC for seamless on-chain functionality.
- This new offering follows Coinbase’s exit from its Borrow program in November 2023, signaling a renewed focus on Bitcoin lending.
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Coinbase has introduced Bitcoin-backed loans through its partnership with Morpho, a decentralized finance protocol with $3.7 billion in total value locked.
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 Borrow 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 without 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) ratio above this threshold.
Collateral is liquidated if the loan balance reaches 86% of the collateral’s market value, triggering repayment and penalty fees, with remaining Bitcoin returned to borrowers.
Interest rates are set by Morpho and adjust automatically with market conditions, updating every few seconds with each block creation on the Base blockchain.
The service features no minimum payments or fixed due dates, provided borrowers maintain appropriate LTV ratios.
The service is available across the US except for New York, with Coinbase planning broader expansion. While currently limited to Bitcoin collateral, the exchange plans to add support for other tokens.
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