Borrow Against Ethereum: Coinbase Revolves Crypto Loans

Coinbase has launched a groundbreaking crypto-backed loan product allowing U.S. users to borrow USD Coin (USDC) using their Ethereum (ETH) as collateral, marking a significant development in decentralized lending.

This ETH-backed loan service, made available through integration with the Morpho lending protocol on the Base network, enables borrowers to access liquidity without the need to sell their Ethereum holdings.

The new lending option is currently accessible to qualified U.S. customers except New York residents, with a borrowing limit capped at $1 million in USDC.

This initiative complements Coinbase’s existing Bitcoin-backed loan product, which previously allowed borrowing backed by BTC, now with increased limits up to $5 million.

Unlocking Ethereum Liquidity Without Selling

The ETH-backed loan allows users to maintain price exposure to their Ethereum investments while receiving immediate liquidity.

Borrowers lock their ETH as collateral on-chain through Morpho’s infrastructure, enabled within Coinbase’s platform interface for ease.

The availability of these loans signifies Coinbase’s efforts to expand borrowing options beyond Bitcoin, offering crypto holders diversified collateral opportunities.

The lending mechanics function through Morpho on Base, leveraging the Ethereum Layer 2 blockchain network's speed and lower fees to facilitate transactions.

Interest rates on these loans are dynamic, adjusting based on supply and demand within Morpho’s ecosystem.

Borrowers can repay loans at any time provided their collateral remains sufficient to meet the required loan-to-value ratios, which safeguards against liquidation if collateral value drops.

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Expanding Crypto Collateral Options

According to Coinbase's senior product director, Ben Shen, the goal is to empower users to access liquidity from assets they have confidence in without triggering taxable events by selling.

Coinbase also revealed plans to extend loan collateral options further, including staked ETH, which will be integrated into this loan product soon.

The introduction of ETH-backed loans is part of a broader trend where crypto platforms offer asset-backed borrowing to provide more financial flexibility for investors.

This liquidity access can support various needs, such as debt refinancing or property purchasing, while allowing investors to hold onto their crypto assets.

In addition to Coinbase's announcement via its official X (formerly Twitter) channel stating, “If you believe in somΞTHing, this one's for you. ETH-backed loans are here. You can borrow USDC against your Ethereum, unlocking liquidity without selling. Available now in the U.S. (ex. NY),” the platform signals growing adoption of on-chain lending products.​

This development is expected to enhance Coinbase’s competitive edge by rounding out its crypto-backed loan offerings and supporting a more expansive decentralized finance ecosystem.

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