Coinbase Launches USDC Onchain Lending With Yields Up to 10.8%

Coinbase exchange has launched an onchain lending service for USDC that offers yields up to 10.8%. The feature is starting in select markets this week and uses Morpho and Steakhouse Financial on Base to manage lending pools.

New Way to Earn With USDC

According to TheBlock’s report, Coinbase has added a lending option for USDC, giving users a chance to earn higher returns than the company’s existing rewards program. When a customer deposits USDC, Coinbase creates a smart contract wallet. That wallet directs funds to lending pools to seek better rates.

The system is powered by Morpho, a lending protocol, and Steakhouse Financial, which manages allocations through vaults on Base, Coinbase’s Ethereum Layer 2 network.

Yields can reach 10.8%. Users start earning right after they deposit and can withdraw whenever liquidity is available. Coinbase says the process is built into its app so that it feels straightforward for customers, even though it runs on decentralized finance protocols.

Different From USDC Rewards

Coinbase already pays customers for holding USDC through “USDC Rewards.” That program offers 4.1% annual yield, or 4.5% for Coinbase One members. The new lending option could provide more than double that amount.

The company explains that the rewards program does not involve lending assets. Rewards are paid directly by Coinbase as part of a loyalty plan. By contrast, the new feature places USDC into lending pools where market conditions decide the yield.

The service is rolling out to a limited group of customers in the United States, with New York excluded. It is also starting in Bermuda and other regions such as Hong Kong, the United Arab Emirates, and South Korea. Coinbase plans to expand access over the next few weeks.

In a separate update, the exchange has asked the U.S. Department of Justice to resolve conflicts between state and federal crypto rules, urging clear national guidelines.

Broader Push Into Stablecoins

The launch is part of Coinbase’s wider effort to expand stablecoin use. Earlier this year, the company allowed customers to borrow up to $1 million in USDC against Bitcoin through Morpho, increasing the limit from $100,000.

In August, Coinbase set up its second Stablecoin Bootstrap Fund, six years after its first. Managed by Coinbase Asset Management, the fund is meant to support liquidity across decentralized markets and help keep stablecoin rates steady.

Morpho, which is backed by Coinbase Ventures, has been a frequent partner in these projects. By offering USDC lending onchain, Coinbase is aiming to give its customers more direct access to the wider decentralized economy while building stablecoin activity across networks.

In related news, Coinbase rejected claims that stablecoins threaten U.S. banks, saying fears of “deposit erosion” are unfounded. The exchange argues stablecoins act as payment tools, not savings accounts.