Coinbase officially expanded its on-chain lending product on November 20, 2025, by enabling U.S. users to borrow against Ethereum (ETH) holdings. The announcement comes on the heels of Coinbase’s integration with the Morpho lending protocol on its Base layer-2 network. This service will be available across the U.S. expect for New York.
Details of the loan mechanics
The system is built on Morpho, a decentralized lending protocol, while Coinbase provides the user interface. Borrowers can put up wrapped ETH (WETH) as collateral, and users can borrow up to $1 million in USDC against their ETH. The maximum loan-to-value (LTV) is 75%, meaning you can borrow up to three-quarters of your collateral value. Liquidation would be triggered if your LTV reaches 86%.
Interestingly, there’s no fixed repayment schedule, meaning you can repay whenever, assuming you keep the collateral healthy. Interest rates are variable, set dynamically based on supply and demand in Morpho’s markets. Although users must know that borrowed USDC cannot be used to trade on Coinbase.
This expands Coinbase’s on-chain lending footprint beyond its existing BTC-backed loans. So far, it has already crossed $1.25 billion in borrowings against Bitcoin. Now opening up ETB-backed loans will give long-term ETH holders a way to unlock liquidity without selling, and potentially avoid taxable events.
Gauging the risks
But users should also watch out for the potential risk they could be staring at while keeping their ETH as collateral. Firstly, any ETH price swing, could push you toward liquidation if your LTV creeps too high. So there could be fears that any tiny breaches of LTV could lead to full collateral liquidation. Also, the service relies on Coinbase Smart Wallet, so any wallet-related issue could impact collateral management. Users should also be aware of smart-contract vulnerabilities or liquidity issues.