Coinbase has introduced a new way for users to put their stablecoins to work, rolling out onchain lending for USD Coin (USDC) directly inside its app. The feature, announced on September 18, offers yields as high as 10.8% annual percentage yield (APY) and reflects the company’s growing push into decentralized finance (DeFi).
How Coinbase’s Onchain Lending Works
The service connects to the Morpho lending protocol on Base, Coinbase’s Layer 2 network. When users deposit USDC, Coinbase automatically generates a smart contract wallet that routes funds into Morpho vaults managed by Steakhouse Financial. These vaults allocate capital across different lending markets to optimize returns.
Interest starts accruing immediately, and withdrawals are possible at any time as long as liquidity is available. In essence, the feature allows retail investors to tap into DeFi yields without the complexity of managing decentralized protocols themselves.
Expanding USDC Utility
Coinbase already offers up to 4.5% APY through its USDC Rewards program, but this new lending option more than doubles that potential income. By integrating directly with permissionless markets via Morpho, Coinbase gives users access to higher yields while keeping the familiar app interface.
At launch, the service is available in the U.S. (excluding New York State), as well as Bermuda, Hong Kong, the United Arab Emirates, New Zealand, the Philippines, Taiwan, and South Korea. Coinbase said it plans to expand availability to more regions in the coming weeks.
Morpho currently secures over $8 billion in total value locked, underscoring the growing demand for decentralized lending.
Coinbase’s Broader Stablecoin Strategy
The move is part of Coinbase’s broader effort to build out an ecosystem of services tied to USDC. In 2025 alone, the company launched USDC loans backed by Bitcoin, raised borrowing limits to $1 million, and expanded USDC’s role into derivatives, NFTs, and even AI-powered payment systems.
With more than $73 billion USDC in circulation, it remains one of the most liquid and widely used stablecoins in the world. By layering new features like onchain lending, Coinbase aims to position USDC as a cornerstone of mainstream crypto finance.
