Coinbase adds fixed-rate borrowing to Bitcoin-backed loans
DeFi & Yields ·
New Morpho-powered option lets Coinbase users set a firm interest rate and payoff date when tapping USDC against their Bitcoin holdings.
Coinbase has rolled out a fixed-rate borrowing tool for Bitcoin-collateralized loans, giving users the ability to fix both the cost of credit and its maturity at the moment they draw a loan, according to Decrypt. The feature runs on Morpho Midnight, a version of the Morpho protocol built specifically to support predetermined rates and maturities rather than the floating costs typical of most on-chain credit markets.
The setup divides responsibilities across three layers: Coinbase manages the app-level borrower experience, Morpho supplies the credit engine that prices and executes the loans, and settlement runs on Coinbase's Base network. This is described as the first deployment of Morpho Midnight at enterprise scale, a milestone The Block also flags in its coverage of the launch.
The new fixed-rate product does not replace Coinbase's existing loan option — it sits alongside the variable-rate Bitcoin-backed loans the exchange first introduced on Base in early 2025, also built on Morpho's infrastructure. That variable-rate line has grown to more than $1.4 billion in active loans, backed by roughly $3 billion in Bitcoin collateral, per the reporting.
Fixed terms address a structural gap in decentralized lending, where borrowing costs typically move with market conditions and can spike without warning. By locking in a rate and repayment date upfront, Coinbase is importing a feature common in traditional credit markets onto a protocol-based lending rail, letting borrowers plan cash flow instead of absorbing rate volatility mid-loan.
The expansion comes after a rockier stretch for Coinbase's lending book: a steep decline in Bitcoin and Ethereum prices in February triggered a record wave of liquidations across existing loans, a reminder of the risk embedded in borrowing against assets that can swing sharply in value. Morpho has also indicated the underlying framework is meant to extend beyond Bitcoin eventually, potentially supporting tokenized stocks and other real-world assets.
What remains unclear is how fixed borrowing costs will be set relative to floating rates, how liquidation mechanics will function for fixed-term loans if Bitcoin's price drops sharply again, and whether Morpho's promised expansion into tokenized real-world assets will materialize on a similar timeline.