Coinbase offers instant loans backed by Bitcoin via Morpho

Cryptocurrency platform Coinbase has officially launched a lending product that enables users to get up to $100,000 in USD, a stablecoin pegged at $1 to Bitcoin. The company stated that this feature is available to US customers except New York and provides quick and convenient access to cash without selling Bitcoin.

Customer funds are Bitcoin, on the basis of which the company creates cbBTC, a Bitcoin application developed by Coinbase. This token effectively integrates Bitcoin into decentralized financial systems.

The cbBTC is then transferred to Morpho, an on-chain lending platform built on top of the Coinbase platform. In return, users receive loans in US dollars that can be used to pay bills, transfer cash internationally, or simply exchange US dollars.

It is distinguished from other financial services, such as loans, in that the new service does not have specific times when certain payments are due. Borrowers can repay at their convenience as long as the loan value falls within the prudent range of collateral. However, if it is valuable Bitcoin If it drops sharply, automatic liquidations kick in to keep the loan adequately covered.

Overcoming Cryptocurrency Lending Challenges with Coinbase and Morpho

Cryptocurrency Lending itself has its drawbacks, namely the current year’s situation with major representatives of the industry, such as Celsius and BlockFi, resulting in billions of dollars in losses and loss of investor confidence. This strategy makes it easier for Coinbase to act as an intermediary for Morpho, where loans can be processed through the DeFi protocol.

This is complemented by the deployment of smart contracts to automate money management and decentralization, eliminating the risks of centralization. As for now, Coinbase It officially wants to restore confidence in cryptocurrency lending and has bold offers and solutions for civilian clients.

One of the uses of cryptocurrency-backed loans is that such a financial solution allows obtaining a loan without selling Bitcoin, which helps avoid paying capital gains taxes. Moreover, since these loans are registered on the blockchain, they provide transparency and expediency that are absolutely unparalleled in the traditional financial market.

The service expands on the company’s previous release of CBBTC in September, where users could interact with decentralized finance applications. This bridge essentially allows Coinbase to connect central finance and decentralized systems, where lending USDC and using CBTC are much easier.

Customers can click on the new service in their Coinbase accounts under the Cash tab to stake Bitcoin and receive USDC within a few seconds. The underlying blockchain provides that interest rates on loans change with market activity, making borrowing convenient for borrowers.

Coinbase has launched Bitcoin-backed loans, bringing the idea of ​​decentralized finance to fruition as part of the global financial services package. Through Morpho and its base blockchainCoinbase continues to enrich its offerings and addresses most segments of the cryptocurrency community with new approaches.