Coinbase has announced a new feature that allows users to lend and borrow USDC, a digital dollar stablecoin. This new service is part of Coinbase’s effort to give users more options to earn and use their digital assets. The platform now offers USDC loans up to $1 million, based on Bitcoin collateral.
Users can borrow without fixed deadlines or monthly payments, making repayments flexible. To prevent liquidation, loans must keep an 86% loan-to-value (LTV) ratio. If the LTV exceeds this limit, the loan can be liquidated, and users may face penalty fees. Coinbase states there are no hidden fees, and interest rates start as low as 5%, which is about half the cost of similar crypto-backed loans. Borrowing transactions are not taxed by Coinbase, making the process straightforward for users.
Borrow USDC with flexible repayment, low rates starting at 5%, and no hidden fees or taxes.
The USDC lending feature is built directly into Coinbase’s app, making it easy for users to access. Coinbase partnered with Morpho, a DeFi platform, to create the onchain USDC lending infrastructure. USDC can be moved into vaults managed by Steakhouse Financial, which helps generate yields. This integration leverages the robust DeFi infrastructure provided by Morpho, ensuring security and efficiency. By utilizing stablecoins, users can mitigate risks associated with price volatility while engaging in lending activities.
This setup allows users to earn interest while their USDC remains within Coinbase’s ecosystem. The platform also allows the seamless transfer of USDC for lending, borrowing, or transactions. Users can earn yields as high as 10.8% on their USDC deposits through the onchain lending system. This yield comes from Morpho’s large DeFi lending platform. Coinbase offers higher rates for some customers, such as those with Coinbase One.
USDC is used both as a stable asset to grow balances passively and as a tool for lending and payments. The platform secures loans by moving Bitcoin collateral onchain to Morpho. Users deposit USDC as collateral for loans, keeping custody within Coinbase’s system.
The LTV limits are enforced to avoid risks. Steakhouse manages the vaults and pools, optimizing liquidity and yield. The system is transparent and secure, with all collateral and loan details onchain. Currently, the USDC lending feature is only available to Coinbase users in the U.S., except for New York State due to regulation. Additionally, the integration leverages Coinbase’s existing infrastructure to ensure seamless user experience. Coinbase says future expansion depends on regulation and demand. USDC is pegged 1:1 to the dollar and is available on multiple blockchains including Ethereum, Solana, and Optimism. It is used worldwide for transactions and payments, with support from partnerships like Morpho and Steakhouse.
