Coinbase has introduced a new onchain lending feature for USDC holders, offering yields as high as 10.8% and broadening access to decentralized finance directly through its app.
Key Takeaways
- Coinbase now enables onchain USDC lending through a partnership with Morpho and Steakhouse Financial, offering yields up to 10.8%.
- The service is integrated with Base, Coinbase’s Layer 2 network, and uses smart contract wallets to route funds across optimized DeFi pools.
- Users can start earning yield immediately with flexible withdrawal options, depending on liquidity.
- The feature is available in select U.S. states (excluding New York), Bermuda, and international markets like Hong Kong, UAE, and South Korea.
What Happened?
Coinbase has rolled out a feature that allows users to lend their USDC stablecoins onchain through its platform, with returns significantly higher than its existing USDC Rewards program. This marks a substantial push by the exchange to deepen user access to decentralized finance, all while keeping the experience simple and familiar.
There’s a new way to grow your bags.
— Coinbase 🛡️ (@coinbase) September 18, 2025
Lend your USDC, earn up to 10.8% currently.
DeFi lending is rolling out on Coinbase. pic.twitter.com/G3KE0aD3Eb
Coinbase Brings Onchain Lending Mainstream
Coinbase’s new USDC lending feature is designed to blend the best of DeFi with the ease of a centralized platform. By leveraging Morpho, a decentralized lending protocol, and Steakhouse Financial, which manages liquidity through onchain vaults, Coinbase users can now earn higher yields without needing to directly navigate complex DeFi platforms.
- When a user deposits USDC, Coinbase creates a smart contract wallet that connects to the Morpho protocol.
- Funds are automatically routed across various lending pools on Base, Coinbase’s Ethereum Layer 2 chain, to optimize returns.
- Yields currently reach up to 10.8%, well above the standard 4.1% APY (or 4.5% for Coinbase One members) offered under its USDC Rewards program.
This approach maintains flexible liquidity. Users can withdraw funds at any time, provided liquidity is available in the pools. According to Coinbase, the system is designed to be intuitive, prioritizing a user-friendly interface while integrating DeFi features securely within its app.
Expanding Global Access to DeFi
The feature is being rolled out initially to users in the U.S. (excluding New York), Bermuda, and a selection of international markets such as Hong Kong, the United Arab Emirates, New Zealand, the Philippines, Taiwan, and South Korea. This aligns with Coinbase’s broader strategy of growing global stablecoin utility and pushing mainstream adoption of onchain services.
Coinbase clarified that this product differs from USDC Rewards, which is funded directly from its marketing budget and doesn’t involve lending user assets. The onchain lending feature, on the other hand, actively participates in DeFi protocols to generate real-time yield.
Built on Previous Collaborations
This isn’t Coinbase’s first collaboration with Morpho. Earlier in the year, the company launched Bitcoin-backed onchain loans through Morpho, raising borrowing limits up to $1 million in USDC against BTC collateral. Coinbase also recently introduced its second Stablecoin Bootstrap Fund, which supports DeFi protocols including Morpho to enhance stablecoin liquidity and stabilize yields.
CoinLaw’s Takeaway
I think this is a really smart move by Coinbase. In my experience, most users want higher yields but don’t want the complexity or risk of dealing directly with DeFi tools. By putting the heavy lifting behind the scenes, Coinbase is helping users access DeFi-level returns without the headache. I found it particularly interesting that they used Base for this, doubling down on their Ethereum Layer 2 bet while also opening the door for more real-world stablecoin use. If you’re holding USDC and want more than the basic rewards, this could be worth checking out.
