Coinbase Introduces Fixed-Rate USDC Loans Against Bitcoin

Users can now borrow USDC against their bitcoin with fixed terms.

Coinbase has unveiled a new lending option that allows users to secure loans in USDC, a stablecoin tied to the US dollar, using their bitcoin holdings as collateral. This service introduces fixed interest rates and predetermined repayment dates, enhancing the predictability of borrowing costs.

These loans are facilitated through the Morpho Midnight protocol, a decentralized lending system that began operating in July, and transactions are processed on Coinbase's Base, an Ethereum layer 2 network. This move marks a shift from the previous variable-rate loans that Coinbase offered, which fluctuated based on market demand.

In its announcement, Coinbase highlighted that this fixed-rate offering provides users with better clarity regarding their loan obligations. The existing variable-rate lending service currently manages over $1.4 billion in loans, backed by nearly $3 billion in collateral.

While fixed-rate loans against bitcoin are not entirely new, with other providers like Ledn and SATL Lending already offering similar services, Coinbase's integration of this option within a popular consumer platform is noteworthy. Paul Frambot, CEO of Morpho, expressed optimism about the partnership with Coinbase, stating that they aim to expand their offerings further.

The bitcoin-backed credit market is estimated to be worth around $16 billion and could potentially grow to $130 billion by 2030, driven by increasing interest from bitcoin holders. A recent survey revealed that 88% of cryptocurrency investors in the U.S. and Australia are open to considering crypto-backed loan products.