Overview
Coinbase has relaunched its Bitcoin-backed lending service, this time partnering with Morpho, a leading decentralized finance (DeFi) protocol. The integration enables instant USDC loans collateralized by Bitcoin (BTC), offering users liquidity without selling their crypto holdings.
Key Features
- Instant USDC Loans: Borrow up to $100,000 in USDC with Bitcoin as collateral.
- Seamless On-Chain Conversion: BTC is wrapped into cbBTC (Coinbase-wrapped Bitcoin) at a 1:1 ratio with no fees.
- Flexible Loan Terms: Adjustable loan-to-value (LTV) ratios, starting at a minimum 133% collateralization.
- Automated Liquidation: Positions are liquidated if collateral falls below 86% of the loan value.
- Dynamic Interest Rates: Morpho’s algorithm updates rates in real-time based on market conditions.
How It Works
- Collateral Deposit: Users deposit Bitcoin, which is converted to cbBTC for on-chain use.
- Loan Issuance: Morpho processes the loan, delivering USDC to the borrower’s Coinbase account in under a minute.
Repayment & Management:
- No fixed due dates or minimum payments.
- Borrowers must maintain the required LTV ratio to avoid liquidation.
Why This Matters
This marks Coinbase’s return to crypto-backed lending after discontinuing its Borrow program in November 2023. By leveraging DeFi infrastructure, Coinbase offers a faster, more transparent lending solution compared to traditional centralized services.
👉 Explore Bitcoin-backed loans on Coinbase
Geographic Availability
Currently available in the U.S. (excluding New York), with plans for international expansion. Future support for additional cryptocurrencies is also in development.
Risks & Considerations
- Liquidation Risk: Falling BTC prices may trigger automatic liquidation.
- Variable Rates: Interest rates fluctuate with market volatility.
- Regulatory Limitations: Service availability depends on regional compliance.
FAQ Section
Q: What is cbBTC?
A: Coinbase-wrapped Bitcoin (cbBTC) is a 1:1 Bitcoin-backed token enabling seamless DeFi integration.
Q: How fast are loans processed?
A: Loans are delivered in under 60 seconds after collateral deposit.
Q: Can I repay the loan early?
A: Yes, early repayment is allowed without penalties.
Q: Is there a minimum loan amount?
A: No, but the maximum is $100,000 per borrower.
Q: What happens during liquidation?
A: The protocol repays the loan, deducts fees, and returns remaining collateral to the borrower.
Q: Will other cryptocurrencies be supported?
A: Yes, Coinbase plans to add ETH and other major assets in the future.
👉 Learn more about DeFi lending
Conclusion
Coinbase’s collaboration with Morpho revitalizes Bitcoin-backed lending, combining the security of a centralized exchange with the efficiency of DeFi protocols. This service is ideal for investors seeking liquidity without sacrificing long-term BTC holdings.
For compliance reasons, always review terms and regional restrictions before borrowing.
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