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Coinbase Revives Bitcoin Loans with Morpho DeFi Integration
January 17, 2025 | Cryptocurrency News
In a significant development in the decentralized finance (DeFi) lending landscape, Coinbase has re-entered the bitcoin-backed loan market. The company has partnered with Morpho to offer up to $100,000 in USDC loans, allowing users to borrow funds without having to sell their Bitcoin holdings.
The reintroduction of this service marks a significant shift in Coinbase’s strategy following a tumultuous period in 2022 when several major DeFi lending platforms, including BlockFi and Celsius, filed for bankruptcy. To mitigate such risks, Coinbase has incorporated overcollateralization and clearly defined interest rates into the new loan program.
According to HFT Market Intelligence, the market size of bitcoin-backed loans is expected to grow exponentially from $8.5 billion in 2024 to a staggering $45 billion by 2030. The resurgence of this service underscores the growing demand for such financial products.
As part of its revamped lending offering, Coinbase has integrated Morpho’s DeFi protocol to provide an instant loan process that can be completed in under a minute. Borrowers are required to maintain a minimum collateral ratio of 133%, ensuring a secure loan-to-value (LTV) threshold.
Notably, the new service does not come with fixed repayment deadlines or minimum payments, provided the user maintains the specified LTV ratio. This flexibility is designed to cater to users who require access to funds for various purposes, such as on-chain activities or converting USDC into fiat currency for real-world expenses.
Coinbase also emphasized that borrowing allows users to delay taxable gains by avoiding Bitcoin liquidation, thereby providing a tax-advantaged approach.
Although the service is currently only available in most states in the United States except New York, Coinbase has hinted at expanding its token acceptance list and geographic reach. At present, only Bitcoins can be used as collateral, but the company is working on integrating additional assets to diversify the range of options.
The partnership with Morpho marks a significant milestone for both companies. “We are excited to bring this innovative lending solution to our users,” stated Coinbase in a statement. “By partnering with Morpho, we aim to address the pain points associated with traditional DeFi platforms and provide a seamless experience for our customers.”
Paul Frambot, CEO of Morpho, added that their platform’s integration with Coinbase will enable the creation of a trustworthy environment for decentralized lending.
The growing need for bitcoin-backed loans is evident in the market’s expansion. As more institutions become increasingly interested in cryptocurrencies, the demand for such financial products is expected to rise sharply.
Source: cryptotale.org
