Coinbase adds fixed-rate Bitcoin loans via Morpho Midnight

Coinbase has added fixed-rate bitcoin-backed loans through Morpho Midnight, letting users borrow USDC against BTC collateral with the interest rate and repayment date set when the loan is taken out. The new option sits alongside Coinbase's existing variable-rate loans, which use Morpho Blue.

For a Bitcoin holder who wants USDC without selling, the appeal is that the borrowing cost is known upfront and the loan has a definite end. Coinbase currently offers maturities at the end of the current month or the end of the next month, with "end of month" defined as the last Friday of the month, according to a Coinbase spokesperson.

How the loan works

Coinbase manages the app experience, Morpho provides the lending protocol, and transactions settle on Base, Coinbase's Ethereum layer-2 network. Borrowers lock BTC as collateral, receive USDC, and pay a rate that is fixed at origination rather than adjusted as markets move.

Borrowers must repay before the maturity date. If a loan goes unpaid, the lender has a claim on the collateral posted by the borrower, the spokesperson said. Coinbase declined to share the interest rates offered to borrowers using Midnight, saying rates are set by supply and demand as lenders and borrowers place offers on an onchain order book. Current reporting does not include loan-to-value ratios, eligibility criteria or the geographic regions where the product is available.

Midnight is still in its early stages

Morpho launched Midnight on Base in July to bring fixed rates and defined loan terms to onchain lending, where borrowing rates have generally been variable. Midnight has around $30 million in deposits as it rolls out, according to a Morpho spokesperson, and Coinbase is the first major consumer platform to offer loans through Midnight at scale.

Tenor Labs launched a lending platform using Midnight in July, and market makers also use the protocol, the spokesperson added. Morpho said Midnight could also be used to create structured credit products and loans backed by tokenized real-world assets.

By comparison, Coinbase's existing Morpho Blue variable-rate loans have grown to more than $1.4 billion outstanding, backed by roughly $3 billion in collateral. Morpho Blue, the variable-rate protocol, has $5.2 billion in outstanding loans and $16 billion in deposits across all integrations, figures that cover the wider Morpho network, not just Coinbase.

"Coinbase Borrow gives our customers access to liquidity without having to sell their assets, and fixed-rate borrowing gives them even greater choice over how they manage that credit," Jacob Frantz, yield and investments product lead at Coinbase, said in a statement.