Coinbase has expanded its on-chain lending offerings by allowing eligible U.S. customers to unlock liquidity using staked Ethereum, without selling their ETH or interrupting staking rewards.
The new borrowing option lets users pledge cbETH (Coinbase’s wrapped staked Ethereum) as collateral and draw loans in USDC, with borrowing handled through smart contracts rather than traditional credit underwriting.
How the ETH-Backed Loans Work
Behind the scenes, the loans are powered by Morpho, an on-chain lending protocol deployed on Base. While users interact through Coinbase’s familiar interface, the capital flows and risk management occur natively on-chain.
Borrowers can access up to $1 million in USDC, depending on collateral value. The system allows a maximum loan-to-value ratio of roughly 75%, with liquidations automatically triggered if leverage rises to around 86% during sharp ETH price moves.
There are no fixed repayment schedules or monthly obligations. Interest rates float based on supply and demand in Morpho’s lending pools, giving the product more flexibility than traditional crypto-backed loans.
Why cbETH Matters
Using cbETH means borrowers remain fully exposed to Ethereum’s price movements and continue earning staking yield while their assets are locked as collateral. For many users, this structure offers a way to raise capital without triggering taxable asset sales, a key distinction from selling ETH outright.
Who Can Use It
The product is available to verified U.S. customers, excluding New York residents. Coinbase has also confirmed that Bitcoin-backed borrowing is supported through cbBTC, with significantly higher borrowing limits that can reach $5 million.
Bigger Picture
This move reflects Coinbase’s broader strategy of blending regulated user access with decentralized finance infrastructure. Rather than replacing DeFi, the platform is increasingly acting as a gateway, abstracting complexity while leaving execution on-chain.
For ETH holders, it adds another option: liquidity without liquidation.
