Base Surges Past Ethereum in Lending Liquidity with Coinbase's Help

Base has emerged as a leader in onchain lending liquidity, surpassing Ethereum mainnet in total value locked (TVL). The Coinbase Layer 2 blockchain's lending ecosystem now holds approximately $3.28 billion in TVL, with Morpho driving the growth.

Morpho's deployment on Base reached roughly $3.3 billion in TVL, mirroring the Ethereum mainnet deployment and effectively creating a mirror image of the lending market. This surge is fueled by Coinbase's DeFi Earn product, powered by Morpho and Steakhouse Financial, which has driven nearly $500 million in USDC deposits into Morpho vaults on Base.

USDC accounts for 84.89% of Base's stablecoin market cap, creating a one-currency economy on the chain. The concentration of USDC has led to a specific type of lending market, with curated USDC vaults holding about $1.62 billion in TVL, representing 22.5% of the global curated vault market.

Base's reliance on USDC is both a strength and a vulnerability. On one hand, USDC's regulatory clarity and Circle's reserve transparency reduce counterparty risks. However, the chain's near-total dependence on USDC creates concentration risk, with potential liquidity shocks if regulatory changes affect USDC's status or Circle restricts USDC activity.