Coin base announced partnered with money market Morpho on January 16 to offer on-chain USD Coin (USDC) lending backed by Bitcoin (BTC), according to a January 16 report edition.
The service allows Coinbase users to borrow USDC by pledging Bitcoin as collateral. Loans are processed via the layer-2 blockchain foundation. The collateral is automatically converted to Coinbase Wrapped Bitcoin (cbBTC) on a 1:1 basis and then transferred to Morpho.
Borrowers can access up to $100,000 in USDC, with interest rates dynamically determined by Morpho’s market-driven mechanism.
On-chain lending offers flexibility without a fixed repayment schedule, but users must monitor their loan-to-value ratio to avoid liquidation if the value of the collateral drops.
According to DefiLlama, Morpho is now the twelfth largest decentralized application by total value, reaching over $3.2 billion by 2024 with 444% growth facts.
DeFi Expansion
Coinbase’s initiative reflects the importance of decentralized finance (DeFi) tools to the company’s expansion plans.
In the announcement, the exchange framed the new service as a step toward introducing traditional financial instruments to the crypto market. Users can convert borrowed USDC to US dollars for free.
The service is also positioned as a tax-efficient alternative to Bitcoin sales, potentially allowing users to defer capital gains or losses. This aspect can be attractive to investors who want to unlock liquidity without triggering taxable events.
This move follows Coinbase’s launch of cbBTC in September, which allowed customers to move Bitcoin to on-chain environments.
According to Dune Analytics dashboard Created by user eekeyguy, cbBTC has surpassed $2.1 billion in supply since launch, equivalent to 21,495.46 BTC. Meanwhile, Bitcoin (WBTC) Wrapped decreased 13.4% in supply during the same period, although the market size is over 132,000 BTC.
Mentioned in this article
Gino Matos
Gino Matos is a law graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise focuses primarily on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).
