Coinbase Introduces Fixed-Rate Loans Against Bitcoin Without Selling
Coinbase has launched a new fixed-rate loan option for users who want to borrow USDC against Bitcoin, without having to sell their cryptocurrency. The innovation is part of Coinbase's Morpho Midnight service, which allows users to receive USDC by posting their Bitcoin as collateral. This addition provides a separate option alongside the existing variable-rate loans on the Morpho Blue infrastructure.
The interest rate and repayment date for the fixed-rate loan are determined at the time the loan is taken out. Unlike traditional loans, where rates may fluctuate over time, this rate remains fixed throughout the loan's term. However, it's worth noting that there isn't a single rate for everyone; instead, the rate is formed through supply and demand based on offers from lenders and borrowers in the on-chain order book.
According to Morpho, Coinbase currently offers loans maturing at the end of the current month or the following month. However, when they say 'end of month', they mean the last Friday of the calendar month, not the last day. This detail is crucial for borrowers to keep in mind, as failing to repay the loan before maturity may result in the lender claiming the Bitcoin deposited as collateral.
It's worth noting that this fixed-rate loan option has been added alongside Coinbase's existing variable-rate loans, which have more than $1.4 billion in outstanding debt and approximately $3 billion in collateral. Morpho also highlighted that Midnight has around $30 million in deposits overall, with its protocol-wide totals not covering Coinbase users alone.