Coinbase Unveils Bitcoin-Backed Onchain Loans via Morpho Protocol
Coinbase has made a groundbreaking move by launching Bitcoin-backed onchain loans, providing customers with an opportunity to borrow up to $100,000 in USDC. The innovative offering is powered by Morpho, a leading decentralized finance (DeFi) protocol operating on Ethereum and Coinbase’s Layer 2 network, Base.
This launch underscores Coinbase’s dedication to expanding financial services onchain, enabling users to leverage their Bitcoin holdings like never before.
Key Highlights of Coinbase’s Bitcoin-Backed Loans
- Loan Features and Limits
- Borrow up to $100,000 in USDC using Bitcoin as collateral.
- Operates on Coinbase’s Layer 2 network, Base, powered by the Morpho protocol.
- Collateral is converted 1:1 into Coinbase-wrapped Bitcoin (cbBTC) without additional fees.
- Flexibility and Security
- Loans are over-collateralized with a minimum collateral ratio of 133%.
- No fixed repayment schedules—borrowers can repay at their own pace while maintaining healthy loan-to-value (LTV) ratios.
- Collateral is liquidated if the loan reaches 86% of the collateral’s market value.
- Market Accessibility
- Initially available in the United States, excluding New York.
- Plans to expand to additional markets in the future.
A New Era of Onchain Lending
Coinbase’s integration of Bitcoin-backed loans marks a shift from its previous Borrow program, which was retired in 2023. The new initiative, powered by Morpho, highlights the synergy between traditional finance (TradFi) and decentralized finance (DeFi).
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Max Branzburg, Coinbase’s Vice President of Product, aptly described the launch as “TradFi in the front, DeFi in the back,” signifying Coinbase’s commitment to integrating modern financial solutions with blockchain technology.
Morpho, a prominent DeFi protocol, boasts a total value locked (TVL) of $3.7 billion and has secured over $69 million in funding from investors such as a16z Crypto, Ribbit Capital, Pantera Capital, and Coinbase Ventures.
How It Works
When a Coinbase user opts for an onchain loan:
- Their Bitcoin is converted to cbBTC and transferred to Morpho.
- The loan amount in USDC is credited to the user’s Coinbase account within a minute.
- Interest rates are dynamically adjusted by Morpho based on market conditions, fluctuating with each block creation on the Base blockchain.
Key Note: Borrowers must monitor their loan status regularly to avoid collateral liquidation, as Coinbase cannot intervene in Morpho’s automated processes.
Why It Matters
This offering gives Coinbase users a unique way to unlock liquidity while retaining their Bitcoin exposure. As DeFi adoption grows, products like these bridge the gap between centralized platforms and decentralized protocols, paving the way for seamless financial innovation.
Insights at a Glance
| Feature | Details |
|---|---|
| Maximum Loan Amount | $100,000 in USDC |
| Collateral Requirement | Bitcoin (converted to cbBTC at a 1:1 ratio) |
| Minimum Collateral Ratio | 133% |
| Collateral Liquidation Level | 86% of the market value |
| Interest Rates | Variable, adjusted with every block creation |
| Repayment Terms | Flexible, no fixed schedule |
| Availability | U.S. (excluding New York) |
| Future Plans | Expansion to new markets and support for more tokens |
With this latest offering, Coinbase continues to lead the charge in onchain financial innovation. By combining the security of traditional platforms with the flexibility of DeFi, it offers customers a seamless way to maximize their Bitcoin’s potential.
