Overview
- Coinbase has launched fixed-rate loans utilizing the Morpho protocol, enabling users to borrow USDC against Bitcoin with predetermined interest rates and repayment dates, contrasting with the variable-rate model prevalent in on-chain lending.
- This initiative represents the first large-scale implementation of Morpho Midnight, with Coinbase managing user interactions, Morpho supplying the credit framework, and Base overseeing settlement processes.
- The new fixed-rate loans complement Coinbase's existing Morpho-based variable-rate offerings, which currently total over $1.4 billion in active loans secured by approximately $3 billion in collateral.
Coinbase is providing a fresh avenue for users to access liquidity without the need to liquidate their Bitcoin holdings by introducing fixed-rate loans powered by the decentralized lending system Morpho.
Announced on Tuesday, this product allows Coinbase users to borrow USDC against their Bitcoin, with the interest rate and repayment timeline established upfront.
Myriad: How high will Bitcoin go? Click to make your prediction.This marks a significant shift from the variable-rate structure that has characterized on-chain lending, where borrowing costs fluctuate with market conditions, leading to unpredictable expenses. Now, borrowers can enjoy certainty regarding both the cost and the term of their loans.
The launch signifies the first enterprise-level rollout of Morpho Midnight, a newer iteration of the protocol designed to facilitate fixed rates and defined loan timelines, with transactions priced and executed natively on the cryptocurrency network. Coinbase oversees the user experience via its application, while Morpho provides the essential credit infrastructure and Coinbase's Base network manages settlement operations.
The fixed-rate loans are introduced alongside Coinbase's existing variable-rate options, which are also powered by Morpho. Coinbase initially launched Bitcoin-backed loans on Base in early 2025, utilizing Morpho as its technology partner.
Currently, this lending business has seen significant growth, boasting over $1.4 billion in active loans backed by about $3 billion in collateral, as reported by Morpho.
Since its inception, Coinbase has steadily expanded its offerings, even previously lowering servicing costs for U.S. borrowers to outpace competitors and later broadening the range of accepted collateral to include assets like XRP and Dogecoin.
However, the lending initiative has faced challenges. A sharp decline in Bitcoin and Ethereum prices in February resulted in record liquidations within Coinbase's loan portfolio, highlighting the risks associated with borrowing against volatile assets.
Fixed interest rates and established repayment schedules are fundamental to traditional credit markets, and their introduction on a platform as significant as Coinbase marks a pivotal advancement for on-chain lending, which has predominantly relied on variable rates until now.
Morpho emphasized the rapid development of this integration as a demonstration that fintech companies can build advanced credit products on top of open infrastructure without needing to overhaul the underlying systems.
While the current offering focuses on Bitcoin, Morpho indicated that the protocol is intended to eventually accommodate tokenized stocks and other tangible assets.