Coinbase Expands Onchain Lending, Now Accepts ETH as Collateral

TLDR

• Coinbase has expanded its on-chain lending product to include ETH as collateral.
• Users can borrow up to $1 million in USDC without selling their cryptocurrency.
• The loans are facilitated through the Morpho lending protocol on Base, with Coinbase handling the user interface.
• ETH-backed loans use wrapped ETH (WETH) as collateral, with support for staked ETH coming soon.
• The loan terms allow a loan-to-value ratio of up to 75%, with liquidation at 86%.

Coinbase has expanded its on-chain lending product to include Ether (ETH) as collateral. This move allows eligible customers to borrow up to $1 million in USDC without the need to sell their cryptocurrency. The expansion leverages the Morpho lending protocol on Base, with Coinbase providing the user interface for the loans.

ETH-Backed Loans Available to Eligible Users

Coinbase has now introduced ETH-backed loans, enabling users to access liquidity while retaining ownership of their crypto. Customers can borrow up to 75% of the value of their ETH collateral, with a liquidation trigger set at 86% loan-to-value (LTV) ratio. The loans have no fixed repayment schedule, allowing borrowers more flexibility.

Ben Shen, Senior Product Director at Coinbase, stated, “People should be able to access liquidity without needing to sell the assets they believe in.” He added that the company plans to expand its loan offerings further. ETH-backed loans use wrapped ETH (WETH) as collateral, with plans to support staked ETH in the future.

Coinbase’s move to support ETH as collateral follows the success of its BTC-backed on-chain lending product. Launched earlier this year, the BTC product has already seen over $1.25 billion in borrowing from approximately 16,000 customers. The growth in on-chain lending aligns with a broader trend in the crypto space, where decentralized finance (DeFi) lending platforms now dominate the market.

The introduction of ETH as collateral allows Coinbase to tap into a larger customer base. Many crypto investors are holding ETH long-term, making it a logical choice for this type of loan. Coinbase aims to serve these holders by offering a way to access liquidity for expenses like down payments or debt refinancing without triggering a taxable event.

Coinbase to Offer Loans Against Staked ETH

The loans are available to verified Coinbase users in the U.S., excluding New York state. The loan amount is based on the collateral’s value, and interest rates are variable, set by supply and demand on the Morpho protocol. Coinbase has made it clear that loan proceeds cannot be used for trading on its platform.

In the coming months, Coinbase will also roll out loans against staked ETH assets. These loans will convert staked ETH into cbETH, which will be used as the underlying collateral token. This feature is expected to be available soon, offering even more options for users seeking liquidity.

Coinbase’s expansion into ETH-backed lending comes as on-chain credit markets continue to grow. According to a Galaxy Research report, crypto-collateralised lending reached $73.6 billion in Q3, a new record. DeFi lending platforms now account for more than half of all outstanding crypto-backed loans, underscoring the shift toward decentralised lending.

With Coinbase’s expansion, the company further solidifies its position in the growing DeFi lending market. The platform is helping drive this trend, offering an accessible, flexible solution for users who wish to borrow against their crypto holdings.

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