Coinbase Surpasses $1 Billion in Bitcoin-Backed Loans via Morpho Platform

Coinbase surpasses $1 billion in bitcoin-backed Onchain loans via Morpho, with plans to reach $100 billion in originations.

Coinbase has crossed a major milestone, surpassing $1 billion in bitcoin-backed Onchain loan originations. This achievement comes just eight months after the service was launched in January 2025. 

Powered by the DeFi protocol Morpho, the platform allows Coinbase users to borrow USDC using their bitcoin holdings as collateral, without needing to sell their assets. With this growth, Coinbase aims to further expand its Onchain lending services, to reach $100 billion in loan originations in the future.

How Coinbase Onchain Loans Work

Coinbase Onchain loan service enables users to leverage their bitcoin holdings as collateral for loans. 

When a customer opts for a loan, their bitcoin is converted into Coinbase-wrapped bitcoin (cbBTC) without incurring any fees. The cbBTC is then transferred to the DeFi protocol Morpho, which facilitates the loan process and disburses USDC to the user’s Coinbase account.

The loan terms require that loans be over-collateralized with at least 133% of the loan amount in bitcoin. Borrowers can choose to secure loans with higher collateral levels if preferred. 

If the loan balance reaches 86% of the collateral’s market value, the position is automatically liquidated to repay the loan and cover a penalty fee. Interest rates are automatically adjusted with each block on the Base network.

Expansion and Future Goals for Coinbase’s Onchain Loan Service

Since launching in January, Coinbase has seen impressive growth in its Onchain loan service. Initially, the platform offered borrowers up to $100,000 in USDC with bitcoin as collateral. This limit was increased to $1 million by April after generating $130 million in originations within the first few months. 

On Tuesday, Coinbase announced that loan limits would increase even further, with plans to allow loans of up to $5 million.

Coinbase CEO Brian Armstrong shared on X that the next target is to reach $100 billion in onchain borrow originations. 

He noted the rapid growth, highlighting that the Onchain economy is thriving. This reflects Coinbase’s ongoing efforts to scale its services, ensuring they meet growing user demand and the overall expansion of decentralized finance (DeFi).

Regulatory Considerations and Service Availability

Currently, the bitcoin-backed Onchain loan service is available to U.S. customers, excluding those residing in New York. Coinbase offers this service via its Ethereum Layer 2 network, Base, which provides the infrastructure for the DeFi protocol Morpho. 

Coinbase does not directly manage the loans, instead acting as an interface for users to access the Morpho protocol.

Despite regulatory challenges faced by Coinbase in the past, the company has continued to innovate and expand its offerings.

The integration of Onchain loans is seen as a strategic move to bring DeFi closer to mainstream adoption, combining traditional finance principles with decentralized technology.

As Coinbase expands its Onchain loan offerings, the company’s future plans include increasing the number of supported cryptocurrencies for collateral. This expansion will provide users with more options in securing loans, cementing Coinbase’s position in the  DeFi space.

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