Unlock Your Wealth: Coinbase Launches Game-Changing Bitcoin-Backed Loans!

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In collaboration with Morpho – the largest lending service within Coinbase’s Base ecosystem – this partnership aims to streamline loan procurement for countless users, making it more accessible and user-friendly.

Historically, DeFi platforms such as Morpho have enabled users to borrow USDC using Bitcoin, but this access was typically limited to those well-versed in cryptocurrencies. By incorporating Morpho’s lending functions directly into Coinbase’s user-friendly platform, the company aims to break down these barriers and provide a smooth experience for their wide range of users.

Max Branzburg, Head of Consumer Products at Coinbase, declared, “We’re marking this point as when Coinbase transitions to the blockchain, and we’ll be accompanied by millions of users with their collective billions in assets.

Crypto Loans Require 133% Collateral – Borrowers Adjust LTV

In contrast to traditional loans that rely heavily on credit ratings, crypto loans require a significant amount of collateral before lending money. Morpho maintains a minimum collateral-to-loan ratio of 133%, allowing borrowers to adjust their loan size as long as it’s over the specified level. If the loan balance reaches 86% of the collateral value, an automatic liquidation process is initiated, followed by repayment and applicable charges.

Morpho’s rates change automatically according to market fluctuations, getting updated roughly every few seconds. Flexible repayment terms or minimal payments aren’t restrictive for borrowers as long as their Loan-to-Value ratio stays within acceptable limits. This setup protects lenders from potential risks while allowing borrowers a degree of freedom.

In case price fluctuations become potentially risky, we’ll alert you via the Coinbase app about potential liquidations, giving you time to respond accordingly,” Branzburg explained.

Borrowing Limits Set at $100,000

The allure of Bitcoin-backed loans is found in their unique feature that allows users to access funds without having to part with their assets, thus avoiding capital gains taxes. With Coinbase, the maximum loan amount is set at $100,000 in USDC, necessitating borrowers to pledge an equivalent or greater value of Bitcoin as security.

This asset-leveraging approach, often colloquially known as “borrow and preserve,” enables the affluent to access quick funds using their assets without having to part with their investments. This tactic serves to sustain wealth throughout multiple generations.

As Bitcoin’s worth increases, people are becoming increasingly interested in utilizing their cryptocurrency holdings for diverse purposes such as purchasing homes and launching businesses. Even crypto traders, who are typically hesitant to sell their assets, can secure loans to invest in ventures or acquire new investments without having to part with their digital riches.

Morpho’s Token Skyrockets 44% to $4.11

Partnering with Coinbase has significantly boosted Morpho’s expansion, as evidenced by a remarkable 44% jump in the value of its native token, MORPHO, on January 17, 2025. This peak price of $4.11 was an all-time high, and the trading volume soared by an impressive 170%, reaching $222 million. These figures are based on Brave New Coin’s Morpho Price Index. The increase in value indicates a rising curiosity towards Morpho’s decentralized finance platform and its groundbreaking services.

Morpho’s infrastructure has experienced rapid expansion, as reported by DefiLlama, with its locked total value now standing at $6.06 billion. This growth is primarily fueled by Morpho’s involvement in Ethereum layer-2 networks and partnerships with platforms such as Moonwell and Centrifuge.

Currently, the Morpho Protocol offers multiple applications such as savings accounts, credit card facilities, and regulated marketplaces. This adaptability positions it as a notable figure within the Decentralized Finance (DeFi) sector, particularly with its collaboration with Coinbase.

Bitcoin-Backed Loan Market to Surge from $8.5B to $45B

The value of the market for loans backed by bitcoin is poised for substantial expansion. Experts predict that it will skyrocket from approximately $8.5 billion in 2024 to a staggering $45 billion by 2030. Those early investors who have amassed wealth through bitcoin are expected to drive this increase in demand.

Integrating bitcoin-backed loans into Coinbase’s platform not only fortifies their ecosystem but also encourages the utilization of their stablecoin, USDC, and wrapped bitcoin product, cbBTC. This action, carried out on the Binance Smart Chain (Base) network and Morpho’s platform, has established a self-contained system that advantages all parties involved.

 

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2025-01-18 18:26