Coinbase introduced a partnership with cash market Morpho on Jan. 16 to supply on-chain USD Coin (USDC) loans backed by Bitcoin (BTC), based on a Jan. 16 launch.
The service will enable Coinbase customers to borrow USDC by pledging Bitcoin as collateral. Loans are processed by the layer-2 blockchain Base. The collateral is routinely transformed to Coinbase Wrapped Bitcoin (cbBTC) on a 1:1 foundation after which transferred to Morpho.
Debtors can entry as much as $100,000 in USDC, with rates of interest decided dynamically by Morpho’s market-driven mechanism.
On-chain loans supply flexibility with no fastened compensation schedule, however customers should monitor their loan-to-value ratio to keep away from liquidation if the collateral’s worth drops.
Morpho is now the Twelfth-largest decentralized utility by whole worth locked, reaching over $3.2 billion in 2024 with a 444% progress, based on DefiLlama information.
DeFi growth
Coinbase’s initiative displays the significance of decentralized finance (DeFi) instruments to the agency’s growth plans.
Within the announcement, the alternate framed the brand new service as a step towards bringing conventional monetary instruments into the crypto market. Customers can convert borrowed USDC to US {dollars} at no cost.
The service can be positioned as a tax-efficient different to promoting Bitcoin, probably enabling customers to defer capital good points or losses. This side might attraction to buyers looking for to unlock liquidity with out triggering taxable occasions.
This transfer follows Coinbase’s September launch of cbBTC, which allowed clients to maneuver Bitcoin into on-chain environments.
In accordance with a Dune Analytics dashboard created consumer eekeyguy, cbBTC has surpassed $2.1 billion in provide since its launch, equal to 21,495.46 BTC. In the meantime, Wrapped Bitcoin (WBTC) fell 13.4% in provide over the identical interval, though its market dimension is over 132,000 BTC.
