Coinbase Bridges DeFi Gap With High-Yield USDC Lending for Mainstream Users

Coinbase has expanded its decentralized finance (DeFi) capabilities by introducing a new onchain USDC lending feature, offering users yields as high as 10.8%. The feature, integrated through Morpho and Steakhouse Financial on Coinbase’s Base network, enables users to lend their USDC holdings across multiple lending pools, with returns optimized via smart contract wallets. Users can withdraw their funds at any time, provided liquidity is available, making the service accessible to both experienced and mainstream users.

The onchain lending functionality contrasts with Coinbase’s existing “USDC Rewards” program, which offers a lower annual percentage yield (APY) of 4.1% (4.5% for Coinbase One members). Unlike the loyalty-based USDC Rewards, the new onchain lending option involves direct asset lending and is managed through decentralized protocols. A Coinbase spokesperson clarified that the company’s USDC Rewards is funded entirely from its marketing budget and does not involve third-party lending.

The service is initially available in the U.S. (excluding New York State), Bermuda, and several international markets, including China Hong Kong, the United Arab Emirates, New Zealand, the Philippines, and South Korea. A broader rollout is expected in the coming weeks. This expansion aligns with Coinbase’s broader strategy to deepen users’ participation in the onchain economy. The company has previously partnered with Morpho, including a Bitcoin-backed onchain loan product that allows customers to borrow up to $1 million in USDC against their Bitcoin holdings.

Coinbase also recently launched its second Stablecoin Bootstrap Fund, managed by Coinbase Asset Management, with the goal of boosting liquidity across DeFi protocols and stabilizing rates in decentralized markets. The initiative follows a similar effort in 2019 and reflects Coinbase’s ongoing commitment to integrating stablecoins into DeFi ecosystems.

The USDC lending feature is part of a growing trend where centralized and decentralized platforms compete for stablecoin liquidity. In comparison, other platforms such as Aave and Compound offer variable APYs based on demand and utilization rates, while centralized services like Ledn and KuCoin also provide competitive returns with varying risk profiles. However, DeFi platforms often involve higher volatility and risks, including smart contract vulnerabilities and impermanent loss, compared to the more regulated and transparent environment of centralized lending.

Coinbase’s entry into onchain USDC lending highlights the increasing convergence between traditional and decentralized financial systems. The company’s approach emphasizes accessibility and security, aiming to bridge the gap between mainstream users and the complexities of DeFi. By leveraging partnerships with protocols like Morpho, Coinbase is positioning itself as a key player in the evolving stablecoin lending landscape.