TL;DR
- Coinbase launches on-chain Bitcoin-backed loans through Morpho, a DeFi protocol on the Base network.
- Customers can borrow up to $100,000 in USDC using their Bitcoin holdings as collateral.
- The loans are managed by Morpho, with Coinbase providing the interface for easy and fast access to the services.
Coinbase, one of the leading cryptocurrency exchange platforms, has introduced its new Bitcoin-backed loan offering of up to $100,000 in USDC, through its collaboration with Morpho, a DeFi protocol. This feature integrates with the Ethereum blockchain and the Base network, a scalable layer incubated by Coinbase, allowing for more efficient operations and greater scalability.
The loan process is facilitated by Morpho, but it only operates on the Base network, not on Ethereum. Customers can borrow using Bitcoin as collateral and receive USDC, a stablecoin pegged to the US dollar, offering a safe and reliable way to manage funds.
Bitcoin as Collateral: Innovation in DeFi
This new initiative marks an important step for Coinbase, which previously offered Bitcoin-backed loans through its “Borrow” program. This service was discontinued in 2023 to focus on higher-demand products. Now, with Morpho, Coinbase returns to the market with a more DeFi-focused approach, providing users with advanced financial services.
Morpho is one of the leading DeFi protocols, with more than $3.7 billion in total value locked (TVL), according to DefiLlama. The protocol has received backing from investors such as a16z Crypto, Ribbit Capital, Pantera Capital, and Coinbase Ventures, among others. Morpho handles the technical execution of the loan, while Coinbase serves as the access interface, ensuring a seamless user experience.
The loan process is straightforward: the customer’s Bitcoin is automatically converted into Coinbase-wrapped Bitcoin (cbBTC) and transferred to Morpho. In less than a minute, the customer receives the loan in USDC in their Coinbase account, making the process quick and efficient.
Additional Details and Loan Conditions
The loans are over-collateralized, requiring a minimum collateralization ratio of 133%. Customers can adjust their loan-to-value (LTV) ratio within this range. If the collateral value falls to 86%, the Bitcoin will be liquidated to cover the loan and any penalties, ensuring the stability of the loan.
The interest rates are variable and automatically adjusted based on market conditions. Additionally, the payment schedule is flexible, allowing customers to repay at their own pace, as long as they maintain an appropriate LTV ratio, giving them greater control over their finances.
This option is initially available only to Coinbase users in the U.S. (excluding New York), with plans to expand to other markets in the future. This service aims to meet the growing demand for innovative financial products in the cryptocurrency space.
