Coinbase has launched fixed-rate loans allowing users to borrow USDC stablecoin against their Bitcoin holdings. This new offering, powered by the Morpho protocol, provides certainty on interest rates and repayment dates, a departure from the variable-rate model common in on-chain lending. The feature is the first enterprise-scale deployment of Morpho Midnight.
Coinbase's introduction of fixed-rate loans brings traditional credit market certainty to crypto-backed borrowing, potentially attracting users seeking predictable costs and durations for their loans. This move could set a new standard for on-chain lending, moving beyond variable rates and offering a more accessible credit product for a wider range of users.
Coinbase has introduced a new fixed-rate loan product that allows users to borrow the USDC stablecoin by using their Bitcoin as collateral. Announced Tuesday, this offering provides borrowers with certainty regarding their interest rate and repayment schedule, a significant shift from the variable-rate model that has historically dominated the on-chain lending market. Variable rates can fluctuate unpredictably with market conditions, whereas the new fixed-rate option offers predictable borrowing costs and durations.
The integration represents the first enterprise-scale deployment of Morpho Midnight, a newer iteration of the Morpho protocol specifically built to support fixed rates and defined maturities. Loans are priced and executed directly on the cryptocurrency network. Coinbase manages the user interface and experience through its application, while Morpho supplies the underlying credit infrastructure, and Coinbase's own Base network facilitates the settlement of transactions.
This fixed-rate product complements Coinbase's existing variable-rate loans, which are also powered by Morpho. Coinbase initially launched its Bitcoin-backed borrowing service on Base in early 2025, utilizing Morpho as its technology provider. This segment of the business has seen substantial growth, with active loans now surpassing $1.4 billion, secured by approximately $3 billion in collateral, according to Morpho. Coinbase has progressively expanded its lending services since their inception, at one point offering lower servicing costs for U.S. borrowers and broadening the range of accepted collateral beyond Bitcoin to include assets like XRP and Dogecoin. However, the lending business has faced challenges, including significant liquidations during sharp price drops in Bitcoin and Ethereum in February, highlighting the risks associated with borrowing against volatile assets.
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