Summary:
Coinbase is launching bitcoin-backed loans through Morpho.
Users can borrow up to $100,000 in USDC by providing sufficient bitcoin collateral.
No credit scores needed; the focus is on collateral to mitigate risk.
The integration of Morpho into Coinbase's platform simplifies access for users.
Liquidation warnings will be provided to users to manage their loan risks.
Coinbase to Offer Bitcoin-Backed Loans Through Morpho
Coinbase (COIN) is expanding its offerings in the U.S. by introducing bitcoin-backed loans. This initiative leverages Morpho, the largest lending platform on its Base network, to attract more users and enhance its on-chain economy.
The lending product isn't entirely new; users familiar with the Base network have previously been able to borrow USDC against their bitcoin through Morpho or other DeFi services. However, the big change is the user-friendly access: Coinbase is integrating Morpho's lending features into its popular interface, eliminating a significant barrier for new users.
A New Approach to Lending
Max Branzburg, head of Consumer Products at Coinbase, stated, "This is a moment where we're planting a flag that Coinbase is coming on-chain, and we're bringing millions of users with their billions of dollars."
Unlike traditional banks that rely on credit scores to determine loan eligibility and terms, the crypto lending landscape operates differently. Platforms like Morpho require borrowers to provide substantial collateral, often exceeding the amount they wish to borrow. This model helps protect against defaults and bad debt.
Loan Details and Risk Management
Coinbase's new lending setup allows users to borrow up to $100,000 in USDC, requiring them to post more than that amount in bitcoin as collateral. If the loan-to-value ratio becomes risky, Morpho will begin liquidating the collateral. Branzburg emphasized that users will receive liquidation warnings via the Coinbase app to help them manage their loans effectively.
The appeal of borrowing in the crypto space is particularly strong for traders who hold significant amounts of tokens but prefer not to sell them. These loans can be utilized for various purposes, from funding risky trades to more traditional needs like purchasing a car or a house.
Enhancing Coinbase's Ecosystem
This new offering not only adds a new capacity to Coinbase's interface but also integrates seamlessly with the cbBTC (Coinbase's wrapped bitcoin on Base) and USDC, all facilitated through Morpho on Coinbase's Layer 2 network. This synergy enhances Coinbase's operational efficiency and expands its service offerings.
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