Key Takeaways
- • Coinbase has added fixed-rate Bitcoin-backed loans to its Coinbase Borrow service, announced September 22 through the Morpho Midnight lending protocol, alongside its existing variable-rate product.
- • Fixed-rate loans are short-term, maturing on the last Friday of either the current month or the next month, and cannot be used for long-term financing.
- • Coinbase has not disclosed interest rates; a spokesperson said rates are set by supply and demand on an on-chain order book.
- • Variable-rate loans allow borrowing up to $5 million in USDC against Bitcoin at an initial 75% loan-to-value (LTV) limit, with a liquidation threshold at 86% LTV, meaning a roughly 13% Bitcoin price decline could trigger liquidation at maximum borrowing.
- • Coinbase has not clarified whether fixed-rate loans carry the same LTV limit and liquidation threshold as variable-rate loans.
Summary
Coinbase has expanded its on-chain Bitcoin-backed lending offering with fixed-rate loans, according to a Motley Fool analysis republished by The Globe and Mail. Coinbase has offered Bitcoin-backed loans since January 2025, allowing users to borrow USDC against their Bitcoin, but until recently only variable-rate loans were available. On September 22, Coinbase announced fixed-rate loans through Morpho Midnight, a lending protocol operating on Base, an Ethereum Layer-2 blockchain. Under this structure, borrowed Bitcoin is converted to Coinbase Wrapped BTC and locked in a smart contract on Base.
The fixed-rate product is structured as short-term financing. Loans mature on the last Friday of the current month or the next, and unpaid balances allow the lender to claim the collateral. Early repayment is permitted, but borrowers owe the same interest amount. A Coinbase spokesperson said rates are determined by supply and demand, with borrowers and lenders posting offers on an on-chain order book. Coinbase has not published available rates.
By comparison, variable-rate loans carry no set term, minimum payment requirements, or due dates, offering greater flexibility but exposing borrowers to rising rates. The variable product allows up to $5 million in USDC borrowing with an initial LTV limit of 75% and a liquidation threshold of 86%. The article notes that a borrower drawing the full 75% limit would face liquidation if Bitcoin fell about 13%. Coinbase has not said whether the fixed-rate product shares these LTV parameters.
The Motley Fool analysis characterizes the fixed-rate loans as useful mainly for short-term liquidity needs, such as emergency expenses where repayment within one to two months is assured, and cautions that Bitcoin's volatility makes crypto-backed borrowing riskier than loans secured by other collateral. The article recommends keeping LTV ratios low to guard against margin calls.
The fixed-rate product is structured as short-term financing. Loans mature on the last Friday of the current month or the next, and unpaid balances allow the lender to claim the collateral. Early repayment is permitted, but borrowers owe the same interest amount. A Coinbase spokesperson said rates are determined by supply and demand, with borrowers and lenders posting offers on an on-chain order book. Coinbase has not published available rates.
By comparison, variable-rate loans carry no set term, minimum payment requirements, or due dates, offering greater flexibility but exposing borrowers to rising rates. The variable product allows up to $5 million in USDC borrowing with an initial LTV limit of 75% and a liquidation threshold of 86%. The article notes that a borrower drawing the full 75% limit would face liquidation if Bitcoin fell about 13%. Coinbase has not said whether the fixed-rate product shares these LTV parameters.
The Motley Fool analysis characterizes the fixed-rate loans as useful mainly for short-term liquidity needs, such as emergency expenses where repayment within one to two months is assured, and cautions that Bitcoin's volatility makes crypto-backed borrowing riskier than loans secured by other collateral. The article recommends keeping LTV ratios low to guard against margin calls.
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