Cryptocurrency exchange Coinbase has launched a new feature that allows users to lend their stablecoin holdings on-chain. The company claims to offer returns of up to 10.8% on USDC.
The new service is powered by the decentralized lending protocol Morpho (MORPHO), and fund allocations are made through onchain vaults managed by Steakhouse Financial on Base, Coinbase’s Ethereum Layer 2 network.
Following the development, there was an increase in the price of the MORPHO token.
Coinbase stated that when users deposit USDC, a smart contract wallet is created and funds are channeled into different liquidity pools to ensure optimal returns. Investments begin earning returns immediately, and users can withdraw their funds at any time, depending on liquidity.
Coinbase was already offering a 4.1% APY under its “USDC Rewards” program. The company argued that its new on-chain lending feature offers significantly higher returns.
A Coinbase spokesperson explained, “The USDC Rewards program does not involve lending customer assets. It is a loyalty program funded entirely from Coinbase’s own marketing budget.”
USDC onchain lending is initially available in the US (excluding New York), Bermuda, and other international markets. Broader availability is planned for the coming weeks.
Coinbase stated that this step is part of its strategy to connect customers directly to the onchain economy.
Earlier this year, Coinbase launched a Bitcoin-collateralized on-chain loan product through Morpho, allowing users to borrow up to $1 million in USDC using their Bitcoin holdings as collateral.
*This is not investment advice.