Coinbase introduced a new on‑chain lending product on its Base Layer‑2 network that lets eligible users borrow up to $1 million in USDC by staking ETH as collateral. The loan is issued through the Morpho protocol, a decentralized lending framework that Coinbase has already deployed for its Bitcoin‑backed loan service. Borrowers must maintain a loan‑to‑value ratio below 86% to avoid liquidation, a risk management standard that mirrors the company’s existing BTC‑backed lending model.
The launch is part of Coinbase’s broader “Everything Exchange” strategy, which seeks to transform the platform into a one‑stop shop for all crypto‑related financial services. By integrating a DeFi protocol on its own Layer‑2 network, Coinbase bridges centralized finance (CeFi) with decentralized finance (DeFi), offering users a familiar interface while preserving the speed and security of on‑chain transactions. The product also provides a tax‑efficient way for users to access liquidity without triggering a taxable event that would occur if they sold their ETH.
Base has already seen rapid adoption, with total lending volume across the ecosystem exceeding $1.27 billion. The new ETH‑collateralized loan product builds on that momentum and complements Coinbase’s existing institutional lending program, which offers a $5 million loan limit for institutional clients. The move also aligns with recent regulatory developments, including the GENIUS Act and OCC guidance that allow national banks to hold crypto collateral and process on‑chain payments, creating a more favorable environment for crypto‑backed lending.
CEO Brian Armstrong highlighted the company’s ambition to scale on‑chain borrowing, noting that the “next goal is $100 billion in on‑chain borrow originations” and that the growth charts “are what every product manager wants to see: hockey‑stick growth.” The statement underscores Coinbase’s confidence that the expanding on‑chain economy will drive demand for its new lending services.
The new loan product is expected to generate additional revenue from interest and fees, diversifying Coinbase’s income sources beyond transaction fees, which are sensitive to market volatility. By offering a high‑limit, low‑liquidity‑risk loan, Coinbase positions itself to capture a share of the growing institutional and high‑net‑worth retail demand for decentralized credit solutions, while reinforcing its role as a comprehensive financial hub for the crypto ecosystem.
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