Coinbase has introduced a new borrowing service that allows eligible customers in the United States to access up to $1 million in liquidity using their staked Ethereum as collateral. The service leverages Coinbase's representation of staked ether, cbETH, enabling users to borrow USDC without having to unstake their ETH and sacrifice staking rewards or trigger capital gains taxes.
The product is available to users in the U.S., excluding New York, with limited access in the United Kingdom. Loans are powered by the decentralized lending protocol Morpho, which facilitates overcollateralized borrowing through smart contracts on the Base network. Upon approval, funds are credited instantly to the user's Coinbase account, while the pledged cbETH collateral is transferred on-chain to a third-party protocol.
Borrowers must maintain a loan-to-value (LTV) ratio below 86% to avoid automatic liquidation, with a maximum initial LTV of 75%. Interest rates are variable, determined by supply and demand on Morpho, and can increase during periods of market stress. If a borrower's LTV exceeds the threshold due to a drop in ETH's price, liquidators can repay part of the debt and seize collateral, receiving an incentive fee.
This move significantly extends the utility of staked ether beyond passive yield generation. Users can now access substantial liquidity for large purchases or portfolio adjustments while continuing to earn staking rewards, a service previously more accessible to institutions.
The launch comes amid a substantial growth in Ethereum staking, with approximately 36 million ETH (about 30% of the circulating supply, valued over $118 billion) staked as of mid-January 2026. Coinbase's staking service is now available in 46 U.S. states, with California, New Jersey, Maryland, and Wisconsin having limited or blocked retail staking programs.
Coinbase has also disclosed plans to support additional collateral types beyond cbETH, building on its existing offering of BTC-backed loans up to $5 million. The feature represents a major step in packaging DeFi-style tools like on-chain lending for mainstream, retail users.
