Coinbase Variable-Rate Loans Through Morpho Exceed $1.4 Billion, Backed by Crypto Collateral
Key Facts
Active variable-rate loans through Coinbase on the Morpho protocol exceeded $1.4 billion, according to a Morpho announcement issued on 22 September 2026. The protocol said the loans were backed by cryptocurrency collateral worth nearly $3 billion. The announcement coincided with Coinbase's launch of fixed-rate loans through Morpho Midnight, adding another borrowing option for its customers. Repayment terms differ for the new product, as repaying a loan early does not reduce the interest owed by the borrower. Coinbase states in its terms of service: "Early repayment does not reduce the interest owed."
Morpho announced the launch of Coinbase's crypto-backed loan service on 16 January 2025. The service allows users to borrow the USDC stablecoin directly within Coinbase's main app, using their assets as collateral. According to Coinbase, bitcoin collateral is automatically converted into the cbBTC token, with no conversion fee. The collateral is then transferred to the Morpho protocol to execute the borrowing transaction, rather than selling bitcoin to obtain liquidity. However, Coinbase's terms restrict the use of borrowed funds, prohibiting customers from using the proceeds of these loans to trade on its platform.
Variable interest rates depend on supply and demand in the lending market, according to Coinbase's help page. The cost of this type of borrowing is therefore linked to market conditions that determine the interest rate, while the other product offers borrowing at a fixed rate. Coinbase allows variable-rate borrowers to repay outstanding amounts in full or in part. These loans have no maturity dates or minimum payments, according to the terms on the company's borrowing page. But interest continues to accrue on the outstanding balance, even without a mandatory payment schedule, leaving unpaid amounts subject to borrowing costs.
Coinbase says bitcoin collateral becomes subject to liquidation when a loan's loan-to-value ratio reaches 86%. The ratio rises as interest accrues on the balance, the amount borrowed increases or the value of assets pledged as collateral falls. A loan may therefore approach the liquidation threshold as collateral values decline, even without additional borrowing. The product page also lists a 4.38% liquidation penalty imposed by Morpho as part of the terms governing collateral liquidation. As for Coinbase's loan protection feature, the company says it "is not a guarantee against liquidation."
Coinbase previously announced that cumulative loan originations through its service on Morpho exceeded 2.17 billion USDC by 14 April 2026. Across the protocol as a whole, Morpho said total deposits exceeded $14 billion in August. The protocol described this as an all-time high for its deposits, which include funds deposited across its various services. In its September newsletter, Morpho pointed to the expansion of yield products operated by Coinbase and Robinhood using its infrastructure. It said deposits in each product exceeded $500 million during the month, as liquidity provision on the protocol expanded.
Max Branzburg, vice president of product at Coinbase, said integrating Morpho on the Base network had made on-chain financial services "more accessible to millions of users." Morpho says users can track their collateral in real time through the BaseScan explorer. It added that they can see where those assets are held and that collateral is not rehypothecated. The expansion extended to users of self-custody wallets, with Morpho announcing on 7 October 2026 that borrowing was available through the Ledger wallet. The integration, implemented by Yield, allows users to borrow stablecoins against wrapped bitcoin holdings, according to the protocol's announcement.