Coinbase announced that on-chain bitcoin-backed loan originations on its Base network surpassed $1 billion in October 2025, reaching approximately $1.003 billion with $1.449 billion in collateral locked, a milestone achieved eight months after the service launched in January. The loans are originated on Morpho, a decentralized finance lending protocol operating on Base, while Coinbase functions as an interface that facilitates user access without directly managing or custodially holding the loans. Bitcoin collateral is wrapped into Coinbase’s cbBTC token and transferred to Morpho, a process that incurs no conversion fee and is designed to preserve asset transparency and user control. Loan disbursements are delivered as USDC stablecoins into users’ Coinbase accounts, enabling immediate liquidity without triggering taxable sales events. Borrowers are required to over-collateralize positions, with a minimum collateralization ratio set at 133 percent, and common loan-to-value selections typically fall between 30 and 40 percent, although users may elect higher LTVs above the minimum. The protocol enforces automated liquidation when the loan balance reaches 86 percent of the collateral’s market value, a mechanism intended to protect lenders and limit systemic losses, yet it introduces the usual market-timing risk for borrowers during rapid price moves. The service’s mechanics emphasize non-custodial principles and algorithmic risk management, which contrast with prior centralized retail loan offerings that Coinbase discontinued amid regulatory challenges in 2023. Originations accelerated rapidly after initial conservative lending caps, moving from early limits of $100,000 to $1 million by April 2025, and more recently to $5 million per user, reflecting a scaling on-ramp aligned with Base’s growing activity and broader DeFi adoption. This growth aligns with trends in blockchain scalability improvements through rollup technologies that enhance transaction throughput. The trajectory was described internally and by observers as hockey-stick growth, with increased caps and institutional participation indicating maturation of demand and confidence in on-chain lending primitives. Market observers note that on-chain bitcoin lending can provide liquidity alternatives to selling bitcoin outright, which may lessen downward selling pressure, although the arrangement still exposes participants to liquidation and smart-contract risks. The milestone underscores Bitcoin’s evolving role as collateral in productive financial applications, while highlighting the operational and regulatory trade-offs inherent in permissionless lending ecosystems. Coinbase has publicly stated a longer-term aim to scale originations dramatically, targeting 100 billion in onchain borrow originations as a stretch goal. Recent market activity, including rising institutional deposits and a broader crypto rally, has likely supported demand for such loan products, reflecting growing institutional interest.
