Loans using Bitcoin as collateral in a fixed interest rate: Coinbase extend loan services Morpho

Coinbase launches a fixed-interest loan service powered by the Morpho Zero Circulation Loan Protocol, allowing users to borrow Stablecoin USDC using Bitcoin as collateral. The interest rate and repayment date are locked in from the beginning, which is a departure from the floating-rate model that has dominated blockchain credit markets for years.

The launch marks the first time Morpho Midnight has been used at an enterprise level, with Coinbase controlling user experience through its app Morpho to provide infrastructure for credit and network base.

Point of change from interest flows into certainty

The product announced on Tuesday allows users Coinbase to apply for a loan without having to sell their Bitcoin holdings, which differs from the original floating rate model in that borrowing costs vary by market and may be unexpectedly high. Users can now choose certainty regarding both cost and duration of loans

On the other hand, Morpho notes that this speed of development is proof that fintech companies can create complex consumer products with an open-source infrastructure without building a completely new infrastructure.

Current status of business credit in Coinbase

This fixed-interest option is in addition to the existing Coinbase floating interest loan, which was also powered by Morpho. By early 2025, according to data from Morpho, this business has grown significantly and currently has a total collateralized debt of over US$1.4 billion with an aggregate collateral value of approximately US$3 billion.

Coinbase has continuously expanded its services, both by lowering service fees for American borrowers at one time and extending the type of collateral from Bitcoin to other assets such as XRP and Dogecoin . However, this path was not smoothed out completely when prices fell sharply in February, causing an account settlement ( liquidation ) that is a record high on the credit portfolios of Coinbase , reflecting risky lending using securitized assets.

The most important step is to trust the blockchain.

Fixed interest rates and fixed repayment dates are considered the cornerstone of traditional credit markets. Bringing these to large platforms such as Coinbase is a remarkable step forward for blockchain loans, most of which operate on floating-rate systems today.

Although this connection will start with Bitcoin , Morpho notes that the protocol is designed to accommodate tokens and other real-world assets in the future.