KEY TAKEAWAYS
- Coinbase introduces bitcoin-backed loans, allowing users to borrow USDC without selling their bitcoin.
- The service, powered by Morpho on Base, offers competitive interest rates and flexible repayment terms.
- Loans are available in the U.S., excluding New York, with plans for broader market expansion.
- This initiative enhances financial flexibility, enabling users to leverage bitcoin while staying within the Coinbase platform.
Coinbase has announced the launch of bitcoin-backed loans, allowing customers to borrow USDC without selling their bitcoin. This new service is powered by Morpho, an open-source lending protocol on Base, and offers competitive interest rates with flexible repayment terms.
The loans are initially available to customers in the United States, excluding New York State, with plans to expand to additional markets. The service enables users to borrow up to $100,000 USDC, depending on the amount of bitcoin pledged as collateral.
How Coinbase’s Bitcoin-Backed Loans Work
To access the loans, users can navigate to the Cash tab within the Coinbase app, select ‘Borrow,’ and enter the desired amount of USDC. The bitcoin used as collateral is automatically converted to Coinbase Wrapped Bitcoin (cbBTC) at a 1:1 ratio and transferred to the Morpho protocol. The USDC loan is then disbursed to the user’s Coinbase account within seconds.
Interest rates are variable and determined by Morpho based on market conditions, adjusting with each block creation on the Base blockchain. There is no fixed repayment schedule, allowing users to choose when to repay their loans. However, if the loan amount, including accrued interest, reaches a certain threshold relative to the collateral’s value, liquidations may be triggered.
Expanding Financial Flexibility with Onchain Innovation
This initiative is part of Coinbase’s broader strategy to provide customers with greater control over their financial lives through onchain innovation. The integration of cbBTC allows users to leverage their bitcoin without leaving the Coinbase platform, while the utility of USDC offers additional financial flexibility.
Customers can earn over 4% in USDC rewards, send USDC globally for free, and convert USDC to USD at a 1:1 ratio without fees, except for third-party processing charges. This feature can be particularly beneficial for covering major expenses like buying a car or making a mortgage downpayment.
For more information on crypto-backed loans, visit Coinbase’s official announcement here.
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