Coinbase has expanded its onchain lending services to include Ether (ETH) as collateral, enabling eligible users to borrow up to $1 million in USDC. This new offering is facilitated through the Morpho lending protocol on the Base network, with Coinbase providing the user interface. The launch coincides with onchain credit markets reaching record highs.
This move by Coinbase allows users to access liquidity without having to sell their crypto assets. Ben Shen, Senior Product Director at Coinbase, stated that the company aims to serve long-term holders seeking liquidity for expenses like down payments or debt refinancing, without triggering a taxable event.
Coinbase's ETH-backed loans utilize wrapped ETH (WETH) as collateral initially, with plans to support staked ETH in the near future. A Coinbase spokesperson mentioned that loans against staked ETH assets will be converted to cbETH as the underlying collateral token.
These loans do not have a fixed repayment schedule, provided borrowers maintain a healthy loan-to-value (LTV) ratio to avoid liquidation. Borrowers can draw up to a 75% LTV ratio, with liquidation triggered at 86%, similar to Coinbase's existing BTC-backed product. Interest rates are variable and determined by supply and demand on Morpho. Loan proceeds cannot be used for trading on Coinbase, as per the terms.
The onchain loans are currently available to verified users in the U.S. (excluding New York state), with plans for broader international access.
Coinbase's BTC-backed onchain loan product, launched earlier in the year, has already facilitated over $1.25 billion in borrowing against approximately $1.38 billion in collateral from about 16,000 customers, according to company data. The expansion to ETH collateral is the first of several additional assets Coinbase intends to support.
The expansion aligns with the increasing trend towards onchain credit and away from centralized lenders. A Galaxy Research report indicated that crypto-collateralized lending reached $73.6 billion in the third quarter of 2025, marking the highest quarter-end figure ever. DeFi lending platforms now account for more than half of all outstanding crypto-backed loans.
In related news, Coinbase also rolled out a feature allowing users to lend their USDC holdings onchain, with yields up to 10.8%. This service is also powered by Morpho and managed through onchain vaults curated by Steakhouse Financial on Base.
The total active loans in the on-chain lending market have surpassed $20 billion, reaching an all-time high. In Q2 2025, on-chain cryptocurrency collateralized loans grew by 42%, reaching a historic high of $26.5 billion. As of Q4 2024, total crypto lending (CeFi + DeFi + CDP stablecoins) reached $36.5 billion, a 157% increase from the Q3 2023 low. DeFi’s share within that total rose to 59.83% in Q2 2025.
