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Coinbase Launches Bitcoin-Backed Loans via Morpho

Coinbase Launches Bitcoin-Backed Loans via Morpho

Coinbase has introduced bitcoin-backed loans in the U.S., allowing users to borrow up to $100,000 in USDC through Morpho, a DeFi platform on the Base blockchain.

In terms of volume, Coinbase is the biggest cryptocurrency exchange in the United States. Now, users can borrow up to $100,000 in USDC stablecoins through bitcoin-backed loans launched in the United States.

But the loans come from Morpho, a decentralized finance (DeFi) lending tool on the Base blockchain. Coinbase handles the transactions on its front end.

Because bitcoin’s price changes a lot, the crypto lending protocol lets users take up to 86% of the value of the bitcoin they put up as collateral. If the worth of the collateral falls below a certain percentage of the stablecoins that were borrowed, it is then sold.

People from every state except New York can get the loans.

Saying Coinbase is always looking for ways to make it easier for customers to access financial tools, Coinbase Vice President of Product Max Branzburg told The Defiant the loans are “another vital step in our mission of unlocking economic freedom for all, providing new and improved utility through a much more efficient loan offering with Morpho.”

Base is the Ethereum Layer 2 blockchain that Coinbase released in August. Morpho is built on top of it. Coinbase said that transaction fees are usually less than one cent and this service has speeds of just a few seconds.

Morpho is the third-largest lending protocol by the amount of assets held in smart contracts. It has locked in a total of $3.74 billion.

At the moment, only bitcoin kept on Coinbase can be used as collateral. However, plans are in the works to add other cryptocurrencies as well.

Coinbase’s wrapped bitcoin, cbBTC, is used as security, and it is then locked into a smart contract on Morpho. Then, the loan amount is sent out in USDC, which is a stablecoin created by Coinbase and Circle. The stablecoins can be invested in on the blockchain or changed into free U.S. dollars that are placed in the user’s Coinbase account.

The second option lets borrowers get cash without selling their bitcoins and paying capital gains taxes.

All of that makes it sound like Coinbase is keeping things close to home, which they are. Coinbase Ventures also put money into Morpho Labs, which makes blockchain-wrapped bitcoin and stablecoin.

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