Coinbase launches new lending solution that allows users to borrow USDC against bitcoin as collateral

Coinbase has launched a new lending solution, allowing users in the United States to obtain up to $100 in USDC by using Bitcoin as collateral.

The initiative comes as a result of a partnership with Morpho, a decentralized finance protocol that processes transactions on a blockchain layer known as Base.

Bitcoin-backed loans are here.

Borrow USDC against bitcoin, without selling it. Rolling out to US users (ex. NY) starting now. More collateral assets and regions to come. Powered by @MorphoLabs and built on @Base.

The future of finance is onchain.

Learn more:… pic.twitter.com/PoLdWLz6aV

— Coinbase ?️ (@coinbase) January 16, 2025

The proposal seeks to ensure greater agility and transparency in operations. By blocking Bitcoin as collateral, the asset is converted into a compatible version called cbBTC, enabling on-chain trading. In a few moments, the amount in USDC is released into the user's account, bringing convenience to those who want to access funds without having to get rid of their cryptocurrencies.

The guarantee structure is marked by a requirement of at least 133% of the amount requested. If the amount deposited drops significantly and reaches 86% of the loan value, the assets are automatically liquidated to pay off the debt, including possible additional charges.

Interest rates are set by Morpho and can fluctuate according to market dynamics, adjusting to each new block created in the Base network. Payment flexibility is also noteworthy, as there are no fixed schedules or mandatory installments, as long as the borrower maintains the level of collateral above the established limit.

Previously, Coinbase had offered a Bitcoin-backed lending service, but the service was shut down in 2023. The resumption now takes place with a greater focus on DeFi, reinforcing the platform's commitment to offering financial solutions that use blockchain technology in a simplified way for the public.

Initially, the service is restricted to most of the United States, with the exception of New York. The company plans to make the service available in other regions, in addition to expanding the options for crypto assets accepted as collateral. The combination of Coinbase's infrastructure and Morpho's protocol aims to connect the cryptocurrency ecosystem to agile and transparent lending processes.

At the time of publication, the price of Bitcoin was quoted at US$99,500.36, up 0.5% in the last 24 hours.

Those responsible for the initiative believe that this approach will promote greater user interaction with DeFi products, without requiring in-depth technical knowledge. By maintaining the experience within the Coinbase ecosystem, there is the expectation that more investors will see the advantages of using Bitcoin as collateral to obtain immediate liquidity.