Coinbase's Fixed-Rate Loans Put Healthy Collateral at Risk After Maturity
Coinbase's fixed-rate Bitcoin-backed USDC loans have introduced a new risk for borrowers. The loans, launched on September 22, 2026, through Morpho Midnight, come with a set repayment date and interest rate. However, this fixed rate creates a liquidation risk separate from the price of Bitcoin.
When a borrower fails to repay the loan in full by maturity, their healthy collateral position can be put at risk of liquidation, even if the loan-to-value ratio remains above 100%. This is because Morpho's post-maturity rules allow for a liquidator to repay the debt and take collateral after the deadline has passed.
Coinbase sends reminders to borrowers seven days, three days, and 24 hours before the maturity date. However, repaying the full balance by the deadline is crucial, as failing to do so can lead to liquidation of the collateral. The available rate and borrowing limit vary by loan, and borrowers cannot convert an existing loan between fixed and variable rates.