On September 22 local time, U.S. crypto-asset exchange Coinbase added a fixed-rate product for borrowing the dollar stablecoin USDC against Bitcoin collateral. Alongside its existing variable-rate product, users can now choose a loan whose interest rate and repayment date are set when the loan is originated.
The new product uses Morpho's decentralized-finance lending protocol, Morpho Midnight. Coinbase provides the interface for applying for and managing the loan in its app, Morpho supplies the underlying lending infrastructure, and transactions settle on the Base blockchain. Morpho said the outstanding balance of Coinbase's existing variable-rate loans exceeds $1.4 billion and is backed by about $3 billion in collateral.
According to a Coinbase representative quoted by The Block, the available maturities at the time of publication were the last Friday of the current month or the following month. Loan rates are determined by supply and demand between lenders and borrowers. Coinbase's official guidance says the applicable rate and borrowing limit are displayed in the app. A fixed-rate loan must be repaid in full by maturity, and early repayment does not reduce the contracted interest. Failure to repay by maturity may result in liquidation of the collateral, while the collateral may also be liquidated before maturity if its value falls to the liquidation threshold.