Coinbase adds fixed-rate bitcoin-backed USDC loans

Coinbase has begun offering fixed-rate, bitcoin-backed USDC loans, allowing users to set the interest rate and repayment date at the time of borrowing rather than accept a rate that moves with market conditions.

The product runs on Morpho Midnight, a decentralised, non-custodial lending protocol for fixed-rate and fixed-term crypto loans that launched in July, and settles transactions on Base, Coinbase's Ethereum layer 2 network. According to an announcement on Tuesday, the offering takes onchain borrowing beyond a predominantly variable-rate model and gives users more certainty over the cost and duration of their borrowing.

The new option sits alongside Coinbase's existing floating-rate loans, which run on the Morpho Blue protocol, where rates are set by supply and demand and can climb when borrowing demand spikes. The announcement states that the floating-rate book holds more than $1.4 billion in active loans backed by nearly $3 billion of collateral. Fixed-rate bitcoin-backed lending is not new — lenders including Ledn and SATL Lending have offered it for years — but Coinbase's version is notable for running onchain through a DeFi application while sitting inside a mainstream consumer app.

Morpho co-founder and chief executive Paul Frambot said on X that the two firms' joint products have been "immensely successful" and that they are now working on scaling them. "We're now building on that foundation and starting to scale: new loan types and use cases, bringing onchain credit one step closer to the scale and diversity of global credit markets," he said.

The bitcoin-backed credit market is currently sized at roughly $16 billion, according to the Bitcoin Digital Credit Report compiled by Apyx and BitcoinTreasuries.net, and some estimates put it at $130 billion by 2030 as preferred equity structures scale. A Protocol Theory survey of 1,244 cryptocurrency holders across the U.S. and Australia found that 88% of respondents said they would consider taking out a crypto-backed loan or credit product.