Bitcoin holders on Base are now borrowing about $1.6 billion in USDC against their coins through Morpho. That sum marks a record for the decentralized lending protocol on Coinbase’s Ethereum Layer 2 network.
The twist is who’s doing the borrowing. Much of the activity comes from Coinbase customers who may not realize they’re using DeFi at all.
The numbers behind the borrowing boom
As of mid-October 2026, outstanding USDC loans backed by cbBTC on Morpho’s primary market reached approximately $1.6 billion. cbBTC is a wrapped version of Bitcoin, a token that represents the underlying coin so it can work inside onchain apps.
Bitcoin-backed borrowing on Morpho’s Base markets is up 55% year-to-date.
The flagship cbBTC/USDC market on Base is the biggest single slice of the pie. As of October 19, 2026, it held $3.26 billion in posted collateral against $1.59 billion borrowed.
Utilization in that market sat at 90.2% on the same date.
Meanwhile, borrowing has gotten cheaper. Rates fell from about 7.5% last year to near 5%, even as loan volumes climbed.
How Coinbase turned DeFi into a back-end service
The engine behind this growth is Coinbase. The exchange launched variable-rate USDC loans powered by Morpho in January 2025.
The setup lets a customer pledge Bitcoin and receive USDC without navigating a DeFi front end, connecting a wallet, or reading a protocol’s documentation. Coinbase handles the interface while Morpho handles the lending logic underneath.
By September 2026, Coinbase’s variable-rate loans had surpassed $1.4 billion in active borrowing, backed by nearly $3 billion in collateral.
Coinbase then added a second option. On September 22, 2026, it introduced fixed-rate loans through Morpho Midnight.
Demand has grown as users convert Bitcoin into cbBTC to use as collateral. Each conversion feeds the market, pulling more Bitcoin into onchain credit rails.
Base becomes Morpho’s main stage
The surge has made Base a principal venue for Morpho’s lending business. Morpho deposits on Base topped $5 billion earlier in 2026, with Coinbase-originated borrowing making up a significant share.
What this means for borrowers, lenders, and the protocol
For Bitcoin holders, the appeal is straightforward. They can access dollar liquidity without selling their coins, and the cost of doing so has dropped to near 5% from about 7.5%.
For lenders supplying USDC, a utilization rate near 90% signals that their capital is being put to work. High utilization generally means suppliers are earning on most of what they deposit rather than sitting idle.
The flip side is that very high utilization can tighten available liquidity. When most of the pool is lent out, there is less room for lenders who want to withdraw all at once.
For Morpho, the growth is tied closely to Coinbase’s front end, which means the protocol’s Base fortunes are linked to how Coinbase continues to build on it.
What to watch next includes how the fixed-rate Morpho Midnight product performs relative to the variable-rate option. Utilization is the other figure to track. If it stays near 90% while borrow rates hold near 5%, that would suggest lender supply is keeping pace with Coinbase-driven demand.
Disclosure: This article was edited by Estefano Gomez. For more information on how we create and review content, see our Editorial Policy.