Coinbase launches fixed-rate loans for USDC, backed by cbBTC
Coinbase fixed-rate loans are now available for USD Coin (USDC) against Coinbase Wrapped Bitcoin (cbBTC) on its Base network. has officially rolled out fixed-rate USD Coin (USDC) loans, allowing customers to borrow against Coinbase Wrapped Bitcoin (cbBTC) on its Base network. The new service, powered by the Morpho Midnight lending protocol, launched on September 22, 2026, offering a predictable alternative to its existing variable-rate offerings.
This expansion aims to provide users with greater financial certainty in the volatile crypto market. Eligible U.S. customers can now access liquidity by pledging their cbBTC without needing to sell their underlying Bitcoin, a strategic move that addresses a core demand in decentralized finance (DeFi).
Understanding Coinbase fixed-rate loans
The introduction of Coinbase fixed-rate loans through Morpho Midnight marks a significant evolution in onchain borrowing. Unlike the fluctuating interest rates of traditional DeFi pools, these new loans establish a set interest rate and a clear repayment date upfront.
This predictability is a direct response to market feedback, as variable rates can expose borrowers to unexpected costs and potential liquidations. Jacob Frantz, Yield and Investments Product Lead at Coinbase, noted that this development provides customers “greater choice over how they manage that credit.”
How Fixed Rates Provide Certainty
With Morpho Midnight, borrowers can select terms from an onchain order book, establishing the interest rate and maturity date when an offer is accepted. Currently, maturities are available at the end of the current month or the following month, with “End of Month” defined as the last Friday of that chosen period.
Crucially, borrowers must repay the USDC before the agreed-upon deadline. Should they miss this date, the lender gains the right to claim the cbBTC posted as collateral, ensuring clear stipulations for both parties and mitigating lender risk.
cbBTC: The Collateral Behind the Loans
The new Coinbase fixed-rate loans leverage Coinbase Wrapped Bitcoin (cbBTC), an ERC-20 token backed one-for-one by native Bitcoin held in Coinbase’s secure custody. This mechanism enables Bitcoin holders to participate actively in DeFi applications, including using their Bitcoin as collateral for loans, without divesting their primary asset.
Launched in September 2024, cbBTC was designed to facilitate Bitcoin’s utility across various blockchains, including Ethereum, Base, Solana, and Arbitrum. Its introduction also sought to provide an alternative to other wrapped Bitcoin tokens, addressing past market concerns.
Managing Collateral Risk with cbBTC
As of September 17, 2026, cbBTC was trading at $76,817, boasting a market capitalization of approximately $7.64 billion and a 24-hour trading volume of $366,072,005. Its all-time high stands at $125,954, with an all-time low of $57,439.
Borrowers can secure up to $5,000,000 USDC against their Bitcoin, but they must maintain a loan-to-value (LTV) ratio under 86%. Should the collateral’s value fall below this threshold due to Bitcoin price declines, positions face automatic liquidation and a penalty fee, even with fixed interest rates.
Morpho’s Expanding DeFi Footprint
French DeFi company Morpho, founded in 2021 by Paul Frambot and Merlin Egalite, is central to Coinbase’s lending infrastructure. Morpho supplies the underlying lending protocols, while Coinbase manages the user-facing application, with transactions settling efficiently on the Base blockchain.
Morpho Blue, launched in 2024, continues to power Coinbase’s existing variable-rate product, which has amassed impressive figures: over $1.4 billion in outstanding loans, backed by approximately $3 billion in collateral. Across its entire network, Morpho reports $5.2 billion in outstanding loans and $16 billion in deposits.
Evolution of DeFi Lending Protocols
Morpho Midnight, which publicly debuted on the Base network in July 2026, operates with a distinct intent-based, peer-to-peer system, diverging from pooled lending models. This design allows lenders to keep capital in variable-rate markets until a fixed-rate offer is accepted, then moving the required liquidity.
Despite its recent launch, Morpho Midnight has already attracted roughly $30 million in deposits. This represents a critical step in the evolution of DeFi lending, moving towards more modular and predictable credit markets that appeal to a broader range of participants, including institutional clients.
Broader Coinbase Strategy and Access
The new Coinbase fixed-rate loans are available to eligible U.S. customers, though New York State remains excluded from the offering. This aligns with Coinbase’s ongoing efforts to expand its suite of financial products and services across various jurisdictions.
Beyond lending, Coinbase has been actively diversifying its offerings. It recently provided eligible UK customers with access to nearly 4,000 U.S. stocks, including fractional shares. In the U.S., it has also opened retail IPO access through Coinbase Capital Markets, starting with smart-ring maker Oura’s offering.
Expanding Global Reach and Lending Options
Coinbase first introduced crypto-backed loans powered by Morpho in January 2025, laying the groundwork for this latest expansion. The exchange also broadened its USDC lending services into Brazil during September 2026, attracting nearly $500 million in deposits for variable returns via Steakhouse Financial-curated vaults.
These initiatives underscore Coinbase’s strategic focus on integrating traditional financial services with the burgeoning crypto economy. By offering both variable and fixed-rate options, the platform aims to cater to diverse risk appetites and financial strategies within its global user base.
The Path Forward for Onchain Credit
The launch of Coinbase fixed-rate loans through Morpho Midnight signals a growing maturity in the DeFi lending landscape. Paul Frambot, Morpho co-founder and CEO, characterized Midnight as a “fundamental shift” toward bringing institutions and consumer fintechs further on-chain.
While early use of fixed-rate markets in some other Morpho deployments, such as stock-backed lending markets, has seen limited fixed-rate borrowing, the potential for Morpho Midnight extends further. Morpho has indicated that its architecture may eventually support structured credit and lending against tokenized real-world assets, pending additional integrations.
This move positions Coinbase and Morpho at the forefront of developing more robust and versatile onchain credit structures. The greater predictability offered by fixed-rate products could attract a significant influx of capital and users seeking stability within the dynamic world of crypto finance.
Comparing Crypto and Traditional Credit
The introduction of fixed-rate loans on the blockchain brings a key feature of traditional finance into the crypto sphere, addressing a gap for borrowers who prefer certainty over potential gains from variable rates. This development is crucial for attracting more mainstream adoption and institutional participation in DeFi.
As the crypto market continues to mature, predictable financial instruments like these fixed-rate USDC loans become increasingly vital. They provide a more stable foundation for long-term financial planning and risk management, fostering greater confidence in the utility of decentralized lending platforms.