Coinbase has introduced an on-chain USDC lending product, offering users an opportunity to access yields currently up to 10.8%. This isn’t the traditional USDC Rewards program—which sits around 4% APY and gets funded out of Coinbase’s own marketing pockets, not through lending or DeFi protocols.
Instead, this new lending feature leverages Morpho, a well-known decentralized lending protocol, with vault allocations curated by Steakhouse Financial. It’s all deployed on Base, Coinbase’s Ethereum Layer 2 scaling solution.
Here’s the workflow: Users deposit their USDC, and Coinbase spins up a dedicated smart contract wallet per user. Funds get routed across multiple onchain lending pools in real time, seeking optimal risk-adjusted returns. Yield accrual kicks in immediately post-deposit, and withdrawals are permitted at the user’s convenience—assuming there’s enough available liquidity in those pools.
Coinbase is pitching this as a DeFi-based solution, but wrapped in a familiar user experience through the Coinbase app interface. It’s specifically not the same as USDC Rewards, as this involves actual lending activity and yield generation via third-party DeFi protocols.
Access is initially restricted—no go for New York users, but it’s rolling out to the rest of the U.S. (minus NY), plus international players in markets like Bermuda, Hong Kong, UAE, New Zealand, Philippines, Taiwan, and South Korea.
This isn’t Coinbase’s first rodeo with Morpho. Earlier in the year, they launched onchain, Bitcoin-backed loans via Morpho, letting users borrow as much as $1M in USDC against BTC held on Coinbase (up from a previous $100K limit). And in a bid to expand stablecoin utility and maintain protocol liquidity, Coinbase recently launched its second Stablecoin Bootstrap Fund, managed by Coinbase Asset Management, aiming to stabilize yield rates and deepen DeFi integrations.
Conclusion:
Coinbase is doubling down on onchain infrastructure, making DeFi exposure possible (and almost painless) for regular users, while increasing USDC liquidity across Layer 2 platforms and diversified lending protocols. This elevates Coinbase’s platform functionality beyond simple trading, reinforcing their ambitions as a true gateway to the decentralized onchain economy.