Table of Contents
Coinbase is introducing Bitcoin-backed loans, leveraging the largest lending platform on its Base network, Morpho.
Until now, Base users have been able to borrow USDC against their Bitcoin on Morpho but now Coinbase is integrating Morpho’s lending functionality directly into UI, which eliminates a significant barrier for users.
Traditional loans depend on credit scores to assess borrowers. Since credit scores don't apply in the crypto space, platforms like Morpho mandate borrowers to supply collateral that significantly surpasses the loan amount, safeguarding against potential defaults.
"This is a moment where we're planting a flag that Coinbase is coming on-chain, and we're bringing millions of users with their billions of dollars," said Max Branzburg, Coinbase’s head of consumer products.
Coinbase’s loans cap at $100,000 in USDC, requiring collateral exceeding that amount in Bitcoin. Morpho will liquidate collateral if the loan-to-value ratio becomes risky.
"If price swings are reaching any sort of dangerous point, we will share liquidation warnings through the Coinbase app so that you're aware of it and can act," Branzburg explained.
These loans offer significant advantages, including earning over 4% in USDC rewards, global free USDC transfers, and the ability to use USDC on-chain.
Additionally, users can convert USDC to USD at a 1:1 ratio without any fees, enabling them to cover substantial expenses like purchasing a car or making a mortgage downpayment. By borrowing against bitcoin rather than selling it, users can defer realizing taxable gains or losses.
Earlier this month, Coinbase was subpoenaed by the Commodity Futures Trading Commission (CFTC) in its investigation into blockchain-based prediction Polymarket.
Blockhead
Coinbase informed affected users that they "may be required to send information" to the CFTC, contingent on legal proceedings.
