Coinbase now offers fixed-rate Bitcoin-backed loans through Morpho Midnight, alongside its variable-rate option. The loans mature within one to two months, and Coinbase hasn't published rates or confirmed liquidation terms.
Coinbase announced fixed-rate Bitcoin-backed loans through Morpho Midnight on Sept. 22. The exchange has offered on-chain Bitcoin-backed loans since January 2025, letting users borrow USDC against their Bitcoin, but until now only with variable rates.
How the fixed-rate loans work
Coinbase runs the loans through its Coinbase Borrow service. Morpho Midnight is a lending protocol on Base, an Ethereum Layer-2 blockchain, and a borrower's Bitcoin is converted to Coinbase Wrapped BTC and locked in a smart contract there.
The loans are short-term, with full payment due at maturity. Loans mature on the last Friday of either the current month or the next month. Borrowers who miss maturity give the lender a claim on their collateral, and early repayment still costs the same interest.
Coinbase has not disclosed rates. A spokesperson said rates come from supply and demand, with borrowers and lenders posting offers on an on-chain order book.
Fixed versus variable terms
Variable-rate loans, by contrast, let users borrow up to $5 million in USDC with no set term, minimum payment or due date. The tradeoff is that the loan rate may rise.
Those loans carry an initial loan-to-value limit of 75% and a liquidation threshold of 86%. A borrower who takes the full 75% would see Bitcoin need to fall only about 13% to reach that threshold. Coinbase has not clarified whether fixed-rate loans share the same limit and threshold.
Risks of borrowing against Bitcoin
The short terms limit the loans' uses. The Motley Fool says they suit quick cash needs, such as an emergency expense, when the borrower can repay in full within one to two months.
Crypto volatility also makes Bitcoin-backed loans riskier than loans backed by other collateral. The source advises borrowers to keep their LTV ratio low to guard against a sudden margin call.
Source: The Motley Fool
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