Coinbase Brings Predictable Bitcoin-Backed Loans to Mainstream Users

Coinbase has launched a new loan product that allows customers to borrow USDC against their Bitcoin while locking in the interest rate and repayment date. This marks a significant change from Coinbase's existing loans, which had floating rates and open-ended repayment.

The new product, called Morpho Midnight, is powered by Morpho on Base and offers fixed-rate and fixed-term borrowing. According to Merlin Egalite, co-founder of Morpho, this is Coinbase's first fixed-rate loan product. The interest rate for the loan comes from a market where borrowers and lenders trade standardized debt and credit units.

Morpho Midnight doesn't work like a traditional bank, where the lender decides the rate to quote the customer. Instead, the price of the debt and credit units determines the borrowing rate. For example, purchasing a unit for 0.95 USDC that pays 1 USDC at maturity implies a return of about 5.26% before fees and losses.

Coinbase has yet to reveal the rates, loan limits, or available maturities for Morpho Midnight. The company's existing loans powered by Morpho Blue use floating rates and open-ended repayment. However, with Morpho Midnight, borrowers can know the borrowing cost beforehand and access liquidity without first selling Bitcoin.