TL;DR
- Coinbase has launched Coinbase USDC loans, allowing eligible users to borrow up to $1 million in USDC using cbETH as collateral.
- The loans are facilitated via the Morpho protocol on Base, with on-chain collateral management and automatic liquidations.
Coinbase has launched a new lending feature that allows users to borrow up to $1 million in USD Coin using staked Ethereum exposure as collateral. The product, described by the company as Coinbase USDC loans, is backed by cbETH. It enables borrowers to access liquidity without selling ETH or forfeiting staking rewards.
The rollout adds another component to Coinbase’s expanding suite of on-platform financial services. It targets users who hold Ethereum long term and want access to dollar liquidity while maintaining exposure to the underlying asset.
What Coinbase announced
Under the new program, eligible users can pledge cbETH as collateral and receive USDC loans through the Coinbase interface. Loan amounts can reach up to $1 million, depending on collateral value and risk parameters. According to Coinbase, they designed the feature to provide liquidity without requiring users to unwind staked positions.
Coinbase routes the loans through the Morpho lending protocol on Base, its Ethereum Layer 2 network. The protocol manages collateral on-chain, while Coinbase supplies the centralized interface, aggregates liquidity, and handles the user experience. Morpho’s smart contracts enforce loan terms and liquidations, rather than discretionary platform rules.
How cbETH is used as collateral
cbETH is Coinbase’s liquid staking token, representing ETH that has been staked through the platform. When users stake ETH, they receive cbETH, which reflects both the principal and accrued staking rewards. In this lending setup, cbETH-backed loans allow users to borrow while their underlying ETH continues to earn staking yield.
This structure makes it possible to borrow against staked Ethereum without selling the original asset. However, collateral value remains fully exposed to ETH price movements, and borrowing is therefore subject to on-chain risks tied to market volatility.
Loan limits and risk controls
The lending feature operates under predefined loan-to-value thresholds within an overcollateralized model. While Coinbase has not disclosed all parameters publicly, maximum loan-to-value ratios are reported to be in the mid-80% range. Borrowers must maintain sufficient collateral value relative to their outstanding loan balance.
As these USDC loans are backed by ETH, price volatility is the primary risk factor. If cbETH collateral falls below the required thresholds, the smart contracts on the underlying protocol will trigger liquidations automatically. Interest rates are variable, and there is no fixed repayment schedule. Users are responsible for monitoring their positions and managing risk throughout the loan period.
Positioning within Coinbase’s product strategy
The introduction of this Coinbase lending feature reflects a broader shift toward secured borrowing products integrated directly into the platform. Rather than emphasizing yield or experimental structures, the company has focused on conservative collateral requirements and clearly defined risk boundaries.
By enabling borrowing against platform-issued staking tokens, Coinbase extends its role beyond trading and custody. The approach mirrors traditional finance practices, where investors borrow against securities instead of liquidating long-term holdings, while blending centralized access with decentralized infrastructure.
The launch also comes amid renewed attention to crypto-backed lending models. After several high-profile failures in earlier market cycles, platforms have moved toward more restrained designs. Coinbase USDC loans align with that trend, combining on-chain enforcement with a controlled user interface.
>>> Read more: Newrez to Factor Crypto Assets Into Mortgage Qualification
Access and availability
The lending feature is rolling out to eligible Coinbase users in the United States, excluding New York, with more limited availability in the United Kingdom. Users must already hold cbETH on Coinbase to qualify for USDC loans. So far, the company has not indicated plans to support external staking tokens or non-custodial collateral at this stage.
As with other Coinbase products, participation requires acceptance of platform terms and ongoing compliance with account requirements. Coinbase has stated that rates, limits, and eligibility conditions may evolve over time.
By allowing users to unlock liquidity from staked Ethereum positions, Coinbase adds another option for managing capital without asset sales. The product combines DeFi-based lending infrastructure with a centralized access layer, offering a controlled approach to borrowing against long-term crypto holdings.
Readers’ frequently asked questions
Who is eligible to use Coinbase USDC loans?
Eligibility depends on jurisdiction and account status. The lending feature is currently available to eligible users in the United States, excluding New York, with more limited access in the United Kingdom. Users must hold cbETH within their Coinbase account to qualify.
Do these loans have a fixed repayment schedule or maturity date?
No. The loans do not have a fixed repayment term. Interest rates are variable, and borrowers can repay at any time, provided collateral requirements remain satisfied.
Can borrowers add or remove collateral while a loan is active?
Yes. Borrowers can manage their position by adding collateral or repaying part of the loan to improve their collateral ratio. Removing collateral is only possible if the remaining collateral continues to meet required thresholds.
What Is In It For You? Action items you might want to consider
Review cbETH exposure before borrowing
Borrowing against cbETH increases exposure to Ethereum price movements. Users should consider how a sharp price decline could affect collateral ratios and liquidation risk before taking a loan.
Monitor loan-to-value thresholds closely
Because liquidations are triggered automatically through smart contracts, borrowers should actively track collateral health and avoid operating near maximum loan-to-value limits.
Check eligibility and regional availability
Access depends on jurisdiction and account status. Users should confirm availability in their region and review current terms, rates, and limits before using the lending feature.
