USDC Loans Against cbBTC Are Available From Coinbase
Coinbase now allows certain users to obtain USDC loans funded by cbBTC at an interest rate of the user’s choosing. The loan maturities will also be set by the user. Traditionally, with variable-rate borrowing, borrowers are presented with an uncertain borrowing cost and an uncertain date in which the borrowing will cease. With fixed-rate borrowing, the borrowing cost is certain, but the cessation date is not.
New Lending Options at Coinbase
Coinbase has added fixed-rate borrowing to its lineup of lending services. Originally, Coinbase’s only borrowing option was variable-rate borrowing, which is facilitated by Morpho Blue. With Morpho Blue, borrowers can obtain USDC-denominated loans with BTC as collateral. Statistics provided by borrowers show that users of Morpho Blue have taken out approximately $1.4 billion worth of variable-rate loans against approximately $3 billion worth of BTC.
Fixed-rate borowing is facilitated by Morpho Midnight. Both fixed and variable-rate borrowing share the same customer interface, and Coinbase manages the user experience.
Ins and Outs of the Coinbase Loan
In order to obtain a USDC loan, a user must provide cbBTC as collateral. The term of the loan and the interest rate are set at the initiation of the loan. Loan maturities are set at the end of the month or the following month. Before the “end of month” (defined by Coinbase as the final Friday of the month), the USDC must be repaid.
Lenders can liquidate cbBTC if a loan is not repaid. This provides borrowers with a more concrete repayment term compared to borrowing with variable loans.
Difference in Loan Products
The main difference between the two products is how loan issuance is facilitated. Variable loans, offered by Morpho Blue, allow borrowers to obtain loans at a rate determined by market conditions. Loans facilitated by Morpho Midnight, on the other hand, enable borrowers to obtain loans at a rate determined by market conditions over a pre-specified term.
Loan Term and Rate Certainty
Loan terms are determined by the onchain order book, whereby the final loan terms are the result of negotiations between a borrower and a lender.
Credit Facility
Midnight’s credit facility is relatively new. It was launched on Base in July, and according to the team, amassed $30 million in deposits in a short time. The Blue facility on the other hand, is larger. According to the team, the facility amassed $5.2 billion in loans and $16 billion in deposits in the time it was operational. It is worth noting that the Blue facility represents the entire Morpho ecosystem.
Morpho has suggested that Midnight could be extended to facilitate structured credit. This could allow for credit products such as asset-backed loans, as well as other types of credit products.
More integrations are expected, and more partners are expected to be announced. Coinbase has Released a New Product: Fixed-Term USDC Loans
Coinbase’s latest product allows customers to borrow USDC, using cbBTC as collateral. The product is based on Morpho Midnight and Base, and offers customers a way to gain USDC liquidity, without needing to sell their cbBTC.
Coinbase has also entered the fixed-term credit market in decentralized finance. This allows customers to access credit at rates that they and Coinbase agree upon.
