Coinbase introduces Bitcoin loans with no fixed repayment terms
Coinbase introduces bitcoin loans
Coinbase, a leading cryptocurrency exchange, has launched a new service enabling users to borrow up to $100,000 in USD Coin (USDC) using Bitcoin as collateral.
This innovative offering, powered by the decentralized finance (DeFi) protocol Morpho, operates on Coinbase's Ethereum Layer 2 network, Base. U.S. customers, excluding those in New York, can access the service, with plans for expansion to other markets, according to Coingape.
A Bridge Between Bitcoin and Liquidity
The loan process is designed for simplicity and efficiency. Users pledge Bitcoin through the Coinbase app, which is converted to cbBTC, a wrapped version of Bitcoin created by Coinbase.
This conversion ensures compatibility with the Morpho protocol, allowing borrowers to access liquidity without selling their Bitcoin. The funds, provided in USDC, are deposited into Coinbase accounts almost instantly.
Notably, there are no fees for converting Bitcoin to cbBTC, and the entire transaction is conducted on-chain, ensuring transparency and security. Borrowers enjoy flexible repayment terms, with no fixed schedules, provided they maintain a safe loan-to-value (LTV) ratio. If Bitcoin’s value drops significantly, Coinbase may liquidate the collateral to mitigate risks.
Expanding DeFi Access
The service marks another step in Coinbase’s efforts to integrate traditional financial services with the decentralized crypto ecosystem. While Bitcoin is the initial collateral option, Coinbase plans to support additional cryptocurrencies in future iterations.
This launch reflects Coinbase’s commitment to enhancing its offerings amid a challenging regulatory environment. The company also recently added the Peanut the Squirrel (PNUT) meme coin to its trading platform.
By combining innovative technology with user-centric features, Coinbase’s Bitcoin-backed loans set a new benchmark for bridging the gap between traditional finance and DeFi.
According to a forecast by Bitwise, Coinbase’s stock is expected to surpass $700 per share by 2025, potentially making it the world’s most valuable brokerage, overtaking Charles Schwab. With shares currently trading above $302, the price would need to more than double to reach that target.
