Coinbase Expands Crypto Lending with Fixed-Rate cbBTC Loans

The new borrowing option allows users to pledge cbBTC as collateral to secure USDC liquidity without liquidating their bitcoin holdings. Unlike the variable-rate service powered by Morpho Blue, where interest rates fluctuate based on market demand, Midnight loans lock in specific rates and repayment deadlines at the point of origination. If a borrower fails to repay the loan by the agreed date, the lender gains the right to claim the underlying cbBTC collateral.

Jacob Frantz, Coinbase’s yield and investments product lead, stated that the fixed-rate structure offers customers greater control over credit management. The protocol utilizes an intent-based, peer-to-peer system that matches individual lenders with borrowers, rather than relying on automated liquidity pools. While Coinbase manages the user interface and Base handles transaction processing, the underlying capital remains in variable-rate markets until a specific fixed-rate offer is accepted.

This expansion follows a period of significant growth for Coinbase’s onchain credit products. The platform’s variable-rate service currently maintains nearly $3 billion in collateral. While the fixed-rate market is in its early rollout phase—holding roughly $30 million in deposits—it complements Coinbase's broader strategy to integrate decentralized finance tools directly into its consumer application. Users must remain mindful that while interest rates are fixed, positions remain subject to standard loan-to-value requirements, meaning fluctuations in the price of bitcoin can still trigger liquidations if debt thresholds are breached.