New Service Alert: USDC Loans with Bitcoin Collateral on Coinbase
- Coinbase introduces USDC loans with Bitcoin as collateral.
- Available for US customers (excluding New York).
- Loans have dynamic repayment based on Base activities.
In a bid to enhance its DeFi offerings, Coinbase unveils a new service that allows US customers to borrow USD Coin (USDC) by leveraging their Bitcoin as collateral. This innovative feature offers quick access to funds without selling Bitcoin.
The Process Explained
Users pledge Bitcoin, converted to cbBTC, a wrapped version for DeFi use. The cbBTC is sent to Morpho, a DeFi lending protocol on Coinbase’s Base blockchain, in exchange for USDC. Interest rates are market-driven.
Transparent and Flexible
Unlike traditional loans, this service has no fixed repayment schedules. Borrowers can repay at their pace, with automatic collateral liquidation if Bitcoin’s value drops below a threshold. Benefits include tax avoidance and blockchain transparency.
Restoring Trust in Crypto Lending
Amid crypto lending scrutiny, Coinbase’s move aims to restore confidence by offering a smart contract-based lending experience through Morpho. The service aligns with user needs and ensures protocol integrity.