Ethereum News Today: Coinbase's ETH Loans Signal Industry Shift to Collateralized, Transparent Lending

Coinbase Global Inc. has launched a new lending product allowing U.S. users to borrow up to $1 million in USDC stablecoin against Ether (ETH) collateral, marking a significant expansion of its onchain services. The offering, powered by DeFi protocol Morpho and operating on Base, is available in most U.S. states except New York and features variable interest rates tied to market conditions according to reports. This move aligns with broader industry trends, as crypto-collateralized lending hit a record $73.59 billion in Q3 2025, driven by onchain platforms capturing 66.9% of the market.

The ETH-backed loans are part of Coinbase's broader strategy to diversify its revenue streams. The exchange plans to extend the program to other assets, including staked Ether (cbETH), and has integrated Morpho into its app to offer users yields of up to 10.8% on USDC holdings. Dune Analytics data reveals Coinbase's onchain lending markets have processed over $1.25 billion in loan originations, with $810 million currently outstanding and 13,500 active borrower wallets according to data.

The expansion reflects a structural shift in crypto lending. Unlike the speculative, uncollateralized practices of the 2021–22 boom, today's market prioritizes transparency and collateralization. DeFi lending applications now dominate 55.7% of the total crypto-collateralized lending market, with onchain protocols accounting for 66.9% of activity. Key drivers include improved collateral assets like Pendle Principal Tokens, price appreciation in ETH and BTC, and incentive programs such as airdrops that encourage users to maintain leveraged positions according to financial analysis.

Centralized lenders are also tightening standards. Tether, the largest CeFi lender tracked by Galaxy Research, controls 59.91% of the market with $14.6 billion in secured loans, followed by Nexo ($2.04 billion) and Galaxy Digital ($1.8 billion) according to market data. Post-2022 crypto collapses, surviving CeFi firms have adopted full collateralization and public reporting to attract institutional capital. Coinbase's recent $375 million acquisition of startup platform Echo and its partnership with Citigroup to streamline crypto-fiat transfers underscore its aggressive expansion in the U.S. market.

Despite the growth, risks persist. A $19 billion liquidation event on Oct. 10-triggered by sharp price drops and automatic deleveraging-highlighted the volatility of leveraged positions, though Galaxy Research attributes the fallout to mechanical risk controls rather than systemic credit weakness. Challenges remain in reconciling overlapping data between CeFi and DeFi, as some lenders borrow onchain and lend offchain, potentially inflating totals.

Coinbase's foray into ETH-backed loans underscores its role in reshaping the crypto lending landscape. With the Trump administration's pro-crypto policies and the GENIUS Act clarifying stablecoin regulations, the exchange is poised to capitalize on a maturing market where collateralized, transparent lending replaces opaque credit models according to industry analysis.

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