Coinbase has introduced a new on-chain lending feature that allows users to earn up to 10.8% annual yield on their USDC holdings. The integration with decentralized lending protocol Morpho (MORPHO) enables direct access to DeFi services within the Coinbase app, marking a significant expansion of the platform's earning opportunities.
The lending system operates through smart contract wallets, with on-chain vaults managed by Steakhouse Financial on Base, Coinbase's Ethereum Layer 2 network. Funds are distributed across various liquidity pools to maximize returns while maintaining flexibility - users can withdraw their funds at any time when liquidity is available.
This new feature represents a substantial upgrade from Coinbase's existing USDC Rewards program, which offered 4.1% APY but was funded from the company's marketing budget rather than actual lending activities. The service is initially available to users in the US (excluding New York), Bermuda, and other international markets, with broader availability planned in the coming weeks.
The integration continues Coinbase's strategy of connecting customers directly to the on-chain economy, following their earlier launch of Bitcoin-collateralized loans through Morpho that allowed users to borrow up to $1 million in USDC using Bitcoin as collateral.