Coinbase Launches Fixed-Rate BTC-Backed Loans

Coinbase Adds Fixed-Rate Option Through Morpho Midnight

@Coinbase has expanded its onchain lending suite with fixed-rate, $BTC-backed loans for U.S. customers, excluding those in New York. The product is built on the @Morpho Midnight protocol, which runs on the @Base Layer 2 network, and gives borrowers the ability to lock in a specific interest rate and repayment date before drawing down funds against their crypto holdings.

Morpho launched Midnight on Base in July to bring fixed rates and defined loan terms to onchain lending, where borrowing rates have historically been variable. Coinbase is the first major consumer platform to offer loans through Midnight at scale, according to a Morpho spokesperson.

The new product adds to Coinbase's existing variable-rate loan offering, also powered by Morpho, giving users a choice between the two structures. Morpho says the variable-rate loans have more than $1.4 billion outstanding against roughly $3 billion in collateral.

How the Loans Work

When a borrower takes out a loan through Coinbase's Morpho integration, their BTC is converted to Coinbase Wrapped BTC (cbBTC) and transferred to a Morpho smart contract where it is held as collateral. The USDC proceeds are then deposited directly into the borrower's Coinbase account. The fixed-rate structure is a meaningful shift from the variable model, where interest rates are calculated automatically by Morpho based on market conditions and can vary with each block created on the Base blockchain.

Midnight has around $30 million in deposits as it continues to roll out. Morpho's broader variable-rate protocol, Morpho Blue, holds $5.2 billion in outstanding loans and $16 billion in deposits across all integrations.

The loans are available to customers starting in the U.S., excluding New York State, with plans to expand to more markets.

Sources:
The Block: Coinbase adds fixed-rate bitcoin-backed loans through Morpho Midnight
Coinbase: Crypto-Backed Loans