Coinbase introduced a partnership with cash market Morpho on Jan. 16 to supply on-chain USD Coin (USDC) loans backed by Bitcoin (BTC), in keeping with a Jan. 16 launch.
The service will enable Coinbase customers to borrow USDC by pledging Bitcoin as collateral. Loans are processed by way of the layer-2 blockchain Base. The collateral is mechanically 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 provide flexibility with no mounted reimbursement 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 software by whole worth locked, reaching over $3.2 billion in 2024 with a 444% progress, in keeping with DefiLlama knowledge.
DeFi enlargement
Coinbase’s initiative displays the significance of decentralized finance (DeFi) instruments to the agency’s enlargement plans.
Within the announcement, the trade 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 beneficial properties or losses. This facet might attraction to buyers in search of to unlock liquidity with out triggering taxable occasions.
This transfer follows Coinbase’s September launch of cbBTC, which allowed prospects to maneuver Bitcoin into on-chain environments.
Based on a Dune Analytics dashboard created person 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 measurement is over 132,000 BTC.
