Coinbase Introduces Bitcoin-Backed Loans with $100,000 Cap
Coinbase has launched Bitcoin-backed loans via the Morpho platform, enhancing liquidity access for crypto holders. The integration simplifies the borrowing process for users, facilitating on-chain transactions.
Key points include:
- Loans capped at $100,000 in USDC
- Minimum collateral ratio of 133% required
- Liquidation occurs if loan balance reaches 86% of collateral's market value
- No credit scores are used; over-collateralization protects lenders
- Flexible terms with no fixed due dates or minimum payments
- Interest rates adjust automatically based on market conditions
The demand for Bitcoin-backed loans is projected to rise from $8.5 billion in 2024 to $45 billion by 2030, reflecting increased adoption and expansion of decentralized finance.
Coinbase's ecosystem allows users to mint wrapped Bitcoin (cbBTC) while borrowing USDC, creating a self-sustaining financial loop on its Layer 2 blockchain, Base. This service enables borrowers to utilize their Bitcoin holdings for significant purchases without selling assets.