Coinbase Fixed‑Rate Bitcoin‑Backed Loans Carry Post‑Maturity Liquidation Risk

Coinbase has launched fixed‑rate loans that let users borrow USDC against Bitcoin collateral. Unlike its variable‑rate products, these loans have a predetermined repayment deadline, creating a distinct liquidation risk that is independent of Bitcoin price movements.

How the Fixed‑Rate Offer Works

The loans are powered by Morpho Midnight, a fixed‑rate lending protocol integrated into Coinbase’s platform. Borrowers see an indicative rate before confirming the loan, and the final rate is locked in at confirmation. The interest amount does not decrease with early repayment, but the fixed rate provides cost predictability.

Liquidation Triggers

Two separate conditions can trigger liquidation:

• Collateral‑health trigger: If Bitcoin’s value falls or the debt grows enough to push the loan‑to‑value (LTV) ratio above Morpho’s threshold, the position can be liquidated before the maturity date.
• Post‑maturity trigger: If the borrower has not repaid the full balance by the set deadline, the loan becomes eligible for liquidation regardless of its LTV ratio. After the deadline passes, a liquidator may repay the outstanding debt and claim the collateral even when the position remains “healthy.”

Borrower Notifications and Restrictions

Coinbase sends maturity reminders at seven days, three days, and 24 hours before the due date. Borrowers must settle the entire balance by the deadline; the loan cannot be converted between fixed and variable rates, and the repayment amount is fixed at the time of borrowing.

Availability

The product is offered to verified U.S. customers (excluding New York) and has limited access in the United Kingdom. Bitcoin is the specified collateral for the fixed‑rate launch, while other collateral options may be available for variable‑rate loans.