Coinbase has introduced its on-chain lending service with a new product that enables customers to borrow up to 1 million USDC using Ethereum (ETH) as collateral. This offering is based on the Morpho lending protocol and utilizes the Coinbase Base network to provide a user-friendly interface while leveraging decentralized finance infrastructure. This represents a strategic expansion for Coinbase into the on-chain credit markets.
ETH as Collateral on Coinbase
The new service allows customers to deposit wrapped ETH (WETH) as collateral to obtain USDC liquidity without needing to sell their assets. Coinbase has also stated that staked ETH (cbETH) will be supported in the future. While Morpho operates the lending mechanism, retail users interact directly through the Coinbase platform, simplifying the process compared to navigating DeFi protocols independently.
BREAKING: Coinbase just launched $ETH collateral for crypto-backed loans, powered by Morpho.
Unlock instant liquidity with your Ethereum! 🚀
Borrow USDC without selling your crypto. Loans originate in seconds, no additional credit checks, repayment anytime.
Click HERE: 👇… pic.twitter.com/JqGsQXvLSJ
— Altcoin Daily (@AltcoinDaily) November 20, 2025
Loan Terms and Liquidation Parameters
Borrowers can access loans up to a 75% loan-to-value (LTV) ratio, meaning for every dollar of ETH pledged, they can receive up to $0.75 USDC. If the LTV reaches 86%, the collateral is at risk of liquidation. In such cases, Coinbase applies a liquidation fee, and the penalty is deducted from the loan balance. ETH-backed loans feature floating interest rates determined by market liquidity and demand on Morpho. There is no fixed repayment period; borrowers can repay their loans partially or in full at any time, provided they maintain an adequate LTV ratio.
Availability and Eligibility
The ETH-backed loan product is currently available to verified Coinbase users in the United States, excluding residents of New York. Borrowers have the option to deposit additional collateral to stabilize their positions during periods of price volatility. Coinbase has clarified that the proceeds from these loans are not intended for trading on the exchange, reinforcing the product's purpose as a liquidity solution rather than a leverage trading tool.
Broader Implications for On-Chain Finance
The launch of ETH-backed loans follows the success of Coinbase's Bitcoin-backed loans, which have facilitated over $1.25 billion in aggregate borrowing volume. Given the growing demand for on-chain credit, Coinbase's strategy offers users a hybrid experience, combining centralized accessibility with decentralized liquidity. This new loan product serves as an alternative to cash, enabling long-term ETH holders to access funds without triggering a taxable event through asset disposal.
Conclusion
Coinbase's ETH-secured loan product marks a significant advancement in on-chain financial offerings, providing greater flexibility for crypto holders in managing their digital assets. While the offering presents benefits such as liquidity and flexible repayment options, users must remain aware of price volatility and the liquidation risks associated with collateralized lending. Nevertheless, this development positions Coinbase as a key provider of regulated on-chain credit access for a broad range of retail and institutional investors.