Coinbase is bringing its DeFi Earn product, powered by Morpho, to its eligible customers in Brazil. Coinbase announced on September 9 that this product rollout would take place in the following days. With this integration, users can choose to allocate their USDC stablecoins to on-chain lending and, in the process, earn rewards, even if their capital is not locked.
Users can access this product through the Lending tab within the Coinbase application. After users deposit their USDC, Coinbase sends the USDC to the Morpho on-chain lending protocol and, through the protocol’s market structure, provides liquidity to borrowers.
How Coinbase’s Morpho USDC Lending Works
An important feature of this offering is that it provides a fairly straightforward way for Coinbase customers to utilize decentralized lending without actually dealing with the underlying on-chain lending infrastructure.
This offering is fairly straightforward:
- Users deposit USDC, which
- gets sent to Morpho.
- Morpho does the lending.
- Users earn rewards and have no time locked capital.
The USDC is kept in an audited vault by Steakhouse Financial to add more institutional oversight to the lending structure.
Variable Lending Rates
Morpho rates are subject to market forces meaning they are potentially higher or lower than fixed rates. This relates to market conditions such as on-chain supply and demand, and can therefore change on a case-by-case basis.
Coinbase One members may receive additional benefits, though users should be aware that market-based rates are subject to volatility.
Popularity of DeFi Earn Interest Products
Coinbase’s Morpho-enabled Earn product has quickly been adopted within the United States. Coinbase states that the total value locked is nearly $500 million and has provided users with the highest potential yield of 7.4% APY, since its inception.
As expected, the demand for stablecoins has increased and more on-chain lending and flexible withdrawal products have become available to users. The upside TVL and high API yield has quickly made Coinbase’s Earn product a well adopted and competitive stablecoin product.
Impact on USDC Users from the Brazil Expansion
Coinbase is better able to serve customers in Brazil by allowing them to earn interest from their stablecoin holdings. Coinbase has positioned the new product as yet another offering of several other services, in contrast to its previously offered USDC rewards and staking.
Coinbase has also included the launch of this new product within its broader strategy of the Everything Exchange, or the expansion of financial products and services offered within its main digital asset trading platform.
The Purpose of Morpho Within Coinbase’s Strategy
Morpho’s technology creates a lending marketplace that connects the two sides of the lending equation; users have the option to lend money to users looking to borrow funds at an agreed price and in exchange, users can provide their crypto as eligible collateral.
For Coinbase, this technology integration helps them provide customers of traditional exchanges with ease of access to decentralized finance while keeping customers within the Coinbase ecosystem.
Key Takeaway for Brazilian Crypto Investors
The Morpho integration helps further develop the functionality of USDC in Brazil. Select users are able to conduct on chain lending through Coinbase and potentially earn market related returns with no risk of capital lock up. Considerations for the risks that can be associated with smart contracts, market risk, and project risk should be made prior to deployment.
