Community Trust ScoreVerified
Coinbase has officially crossed a major milestone, originating over $1 billion in onchain loans using bitcoin as collateral through the DeFi protocol Morpho. The achievement comes just eight months after the start of the service in January 2025, signaling rapid adoption and strong growth in the crypto lending space.
Coinbase CEO Brian Armstrong highlighted the platform’s ambition for the future, posting on X: “Next goal: $100B in onchain borrow originations. These adoption charts are what every product manager wants to see: hockey stick growth. The onchain economy is thriving.”
How Coinbase Onchain Loans Work
The bitcoin-backed loan program leverages Morpho, a DeFi protocol within the Coinbase Ventures portfolio, to provide users with USDC loans without selling their bitcoin. Borrowers can pledge bitcoin held on Coinbase as collateral, enabling access to liquidity while maintaining exposure to BTC.
When a user opts for an onchain loan, their bitcoin is converted 1:1 into Coinbase-wrapped bitcoin (cbBTC) at no cost. The wrapped tokens are then transferred to Morpho, which disburses the USDC loan directly to the customer’s Coinbase account. The system functions like “TradFi in the front, DeFi in the back,” according to Coinbase VP of Product Max Branzburg.
Loan Limits and Growth
Initially, borrowers could access up to $100,000 in USDC against their bitcoin holdings. After strong early adoption—generating $130 million in originations within the first few months—Coinbase raised the limit to $1 million by April 2025.
In a recent update, the company announced plans to increase the maximum loan size to $5 million, reflecting growing demand in the onchain lending market. Armstrong noted that as the onchain economy expands, Coinbase is scaling its services to meet customer needs.
Key Features and Mechanics
Coinbase onchain loans require over-collateralization with a minimum 133% collateral ratio, though borrowers can select a higher loan-to-value (LTV) level if desired. If the loan balance reaches 86% of the collateral’s market value, the position is automatically liquidated to repay the debt and cover a penalty fee.
Interest rates are dynamically adjusted with each block on Base, Coinbase’s Ethereum Layer 2 network, while repayments remain flexible. There are no minimum repayment amounts or deadlines, provided the borrower maintains a safe LTV ratio.
Currently, bitcoin is the sole collateral option for the program, though Coinbase has expressed intentions to support additional cryptocurrencies in the future. The service is available to U.S. users, with the exception of New York residents.
Historical Context
Coinbase previously offered a bitcoin-backed loan program for retail customers, which was discontinued in November 2023 amid regulatory scrutiny from the Securities and Exchange Commission. Unlike that program, the current offering provides users with a seamless interface to access Morpho without Coinbase directly managing the loans.
The shift reflects a broader trend in the crypto industry, combining traditional finance accessibility with DeFi innovation. Users can now leverage the security of a centralized exchange while tapping into decentralized lending protocols.
Expanding Coinbase’s DeFi Services
The bitcoin-backed loan service is part of Coinbase’s broader push into onchain finance. In September 2025, the platform introduced an onchain USDC lending feature, offering yields of up to 10.8%. By providing flexible borrowing and lending options, Coinbase aims to position itself at the forefront of the growing onchain economy.
Market Implications
The rapid adoption of bitcoin-backed loans demonstrates increasing confidence in DeFi protocols integrated with major exchanges. Analysts see this as a strong indicator of institutional and retail interest in onchain lending, which could drive further growth in crypto-backed financial services.
By crossing the $1 billion mark in originations, Coinbase has established itself as a leading player in the onchain lending sector. With plans to scale to $100 billion in loans, the exchange is setting ambitious targets that could reshape the interface between centralized and decentralized finance.
