Coinbase Introduces Onchain USDC Lending with Up to 10.8% APY

Coinbase is enhancing its decentralized finance offerings by launching onchain lending for USDC directly within its app.

Key Takeaways

Launch of Onchain Lending: Coinbase has launched an onchain lending feature for USDC, enabling users to earn yields up to 10.8%.
Integration with Morpho: This new service is powered by the Morpho lending protocol, facilitating seamless transactions for users.
Enhanced Earnings: The onchain lending feature significantly boosts earnings compared to the existing USDC Rewards program, which offers up to 4.5% APY.
User Accessibility: Initially, the feature is available to users in the U.S. (excluding New York State) and several other regions, with plans for broader availability.
Expanding Financial Services: Coinbase is continuously expanding its USDC-related services, including loans backed by Bitcoin and integrations in various financial domains.

Coinbase USDC onchain lending

Coinbase has recently introduced a new feature allowing users to lend their USDC and earn interest rates as high as 10.8% through its application. By leveraging the Morpho lending protocol on its Layer 2 network called Base, users can easily earn higher yields on their stablecoin deposits. This innovation aims to strengthen the utility of USDC, making it even more valuable in the cryptocurrency landscape.

Coinbase's Onchain Lending Feature

On September 18, Coinbase announced its onchain lending capability for USDC, allowing users to earn impressive yields of up to 10.8% directly from within its app. This integration connects to the Morpho lending protocol on Base, which is Coinbase's Layer 2 network. When users deposit USD Coin, Coinbase sets up a smart contract wallet that allocates their funds into Morpho vaults managed by Steakhouse Financial. This strategy enables optimal profit distribution across various lending markets, ensuring that interest begins accruing immediately. Users also enjoy the flexibility to withdraw their funds whenever there is liquidity available.

Growing the Use of USDC

This new offering supplements Coinbase's existing USDC Rewards program, which currently provides returns of up to 4.5% APY for holding USDC. The latest feature taps into permissionless markets via Morpho, offering returns that are significantly higher than the existing rewards while maintaining the user-friendly Coinbase interface.

Initially, this feature is accessible to users in the U.S. (excluding New York State), Bermuda, Hong Kong, the United Arab Emirates, New Zealand, the Philippines, Taiwan, and South Korea. Coinbase has indicated that it will expand access to more regions in the weeks to come.

The Morpho protocol boasts more than $8 billion in total value locked, demonstrating a strong demand for decentralized lending. With this integration, Coinbase acts as a bridge for retail users, allowing them to access on-chain yields easily without having to navigate complex decentralized finance (DeFi) protocols.

Coinbase's Commitment to a USDC Ecosystem

In 2025, Coinbase has progressively expanded its range of services tied to USDC. This includes the introduction of USDC loans backed by Bitcoin, with limits raised to $1 million. The exchange has also expanded USDC's role in derivatives, NFTs, and even AI-driven payments, creating what it calls a “flywheel” effect for adoption.

USDC remains one of the most widely used and liquid stablecoins, with over $73 billion in circulation. The introduction of onchain lending further solidifies its utility, underscoring Coinbase's belief that stablecoins will play a crucial role in driving mainstream crypto finance adoption.