Coinbase is making another big move into decentralized finance (DeFi) with the launch of onchain lending for USD Coin (USDC) directly inside its app. The new feature, announced on September 18, allows users to earn yields of up to 10.8% APY without leaving the Coinbase ecosystem.
How It Works
The service is powered by Morpho, a decentralized lending protocol, running on Base Coinbase’s own Layer 2 network. When a user deposits USDC, Coinbase automatically creates a smart contract wallet and routes the funds into Morpho vaults curated by Steakhouse Financial.
These vaults spread capital across multiple lending markets to optimize returns. Interest begins to accrue instantly, and users keep full flexibility they can withdraw funds anytime as long as liquidity is available.
Expanding USDC Utility
This launch builds on Coinbase’s existing USDC Rewards program, which currently offers up to 4.5% APY for simply holding the stablecoin. By plugging into Morpho’s permissionless markets, Coinbase is now offering more than double those returns all while keeping the familiar, user-friendly interface of its app.
At launch, the feature is available to users in:
- United States (excluding New York)
- Bermuda
- Hong Kong
- United Arab Emirates
- New Zealand
- The Philippines
- Taiwan
- South Korea
Coinbase has said wider global access is coming soon.
Why It Matters
Morpho already secures over $8 billion in total value locked (TVL), showing strong demand for decentralized lending solutions. By integrating Morpho directly into its app, Coinbase acts as a gateway to DeFi, letting everyday users tap into onchain yields without needing to learn complex protocols or manage multiple wallets.
Coinbase’s Bigger USDC Play
This is just the latest piece of Coinbase’s strategy to make USDC central to its ecosystem. In 2025 alone, Coinbase has:
- Launched USDC loans backed by Bitcoin, later raising borrowing limits to $1 million.
- Expanded USDC usage into derivatives, NFTs, and AI-powered payments.
- Continued to push what it calls a “USDC flywheel” where every new service builds more utility and demand for the stablecoin.
With more than $73 billion USDC in circulation, stablecoins remain one of the strongest bridges between traditional finance and crypto. Coinbase’s new onchain lending feature not only boosts potential earnings for users but also reinforces the idea that stablecoins will be at the heart of mainstream crypto adoption.
