Coinbase Crosses $1 Billion in Bitcoin-Backed On-Chain Loans, Brian Armstrong Sets $100B Target

Coinbase has reached a new milestone in on-chain loans, surpassing $1 billion in Bitcoin-backed loans. The service is powered by Morpho, allowing users to borrow USDC by using their BTC holdings as collateral. With the rapid growth of on-chain loans, Brian Armstrong, the CEO of Coinbase, has set the next target for on-chain lending services at $100 billion.

Coinbase On-Chain Loans See Rapid Growth

In January 2025, Coinbase, one of the leading crypto exchanges, introduced on-chain lending via the DeFi protocol Morpho. Lending through Morpho allowed Coinbase users to borrow USDC stablecoin using their Bitcoin (BTC) holdings as collateral, but without needing to sell their assets.

The service began to gain massive adoption among Coinbase users in April and has now crossed $1 billion. This coincides with the announcement from Coinbase in April when the on-chain lending service became available to residents of the United States. 

Dune dashboards show that Coinbase has facilitated more than $1.015 billion across 14,348 active wallets. In announcing the milestone, Brian Armstrong said that the adoption charts of on-chain lending on Coinbase are what every product manager wants to see: hockey stick growth. With the on-chain economy thriving, Armstrong set the next target at $100 billion. 

How On-Chain Loans Work on Coinbase

The Coinbase on-chain loan service is facilitated through Morpho and allows users to use their BTC for loans. When a user applies for an on-chain loan on Coinbase, their Bitcoin holdings are converted into Coinbase-wrapped Bitcoin (cbBTC) without incurring any fees. 

The cbBTC is subsequently moved to the DeFi protocol Morpho, which supports the loan application and issues the USDC to the Coinbase account of the user. The loan policies stipulate over-collateralization of a loan of a minimum of 133% of the loan amount in Bitcoin. Borrowers have the option of taking loans with a greater level of collateral.

When the loan balance drops to 86% of the value of the collateral in the market, the position is automatically sold to repay the loan and pay a penalty. Morpho operates on the Ethereum Layer 2 network, Base, to achieve quicker and cheaper transactions. 

Coinbase only provides the interface for the on-chain loan, while Morpho manages the backend operations of the loans. There are several benefits of Coinbase’s on-chain loans, including its dynamic interest rate. The interest rate moves automatically alongside every block on the Base network. Coinbase also offers flexible terms of repayment.

Coinbase Plans To Expand Its On-Chain Loan Services 

As the on-chain loan services grow in adoption, Coinbase plans to expand its services to accommodate more customers. In April, Coinbase moved the limit for loans up to the current $1 million, which brought in over $130 million from originations within the next few months.

Now, Coinbase has unveiled plans to increase the maximum loan size to $5 million, reflecting growing demand in the on-chain lending market. Armstrong has noted that Coinbase will continue to scale its services to meet the demands of its users.