Coinbase and Morpho Launch Fixed‑Rate Bitcoin‑Backed USDC Loans

Coinbase has added a new borrowing option for U.S. customers outside New York: fixed‑rate loans backed by Bitcoin. The product, called Morpho Midnight, lets borrowers lock in both the interest rate and the loan maturity before receiving USDC.

How the product works

When a user opts for a loan, their Bitcoin is wrapped into Coinbase’s cbBTC token and transferred to a Morpho smart contract on the Base network. The cbBTC serves as collateral, and the borrower receives USDC directly in their Coinbase account. Coinbase acts as the front‑end, while Morpho provides the credit‑allocation engine.

Fixed rates versus previous offering

Earlier Coinbase loans, powered by Morpho Blue, used floating rates and allowed open‑ended repayment. Midnight introduces a fixed rate and a defined maturity, giving borrowers a more traditional loan experience while still operating on‑chain.

Market‑driven pricing

Rates are set by an on‑chain market where lenders and borrowers trade standardized debt and credit units. A debt unit represents a promise to repay 1 USDC at maturity; a credit unit represents a lender’s claim to receive 1 USDC at the same point. The price of these units determines the effective borrowing rate.

Scale of the experiment

• Approximately $3.60 billion in Coinbase‑linked collateral is held in the system.
• Outstanding borrowing totals about $1.56 billion.
• More than $3.07 billion has been originated since launch.
• Roughly 53,000 borrowers are active.

Risks and considerations

While the interest rate is fixed, the value of the Bitcoin collateral can still fluctuate. If Bitcoin’s price falls enough to breach the loan‑to‑value threshold, the collateral may be liquidated. Additionally, borrowers must repay the principal by the specified maturity date.

Implications for crypto credit

Midnight brings a more familiar borrowing model to on‑chain finance, combining the predictability of traditional loans with the efficiency of decentralized smart contracts. The product reflects a broader trend of crypto credit services adopting features common in conventional banking.