Coinbase launches onchain USDC lending with up to 10.8% APY

Coinbase is deepening its decentralized finance push with the launch of onchain lending for USDC directly within its app.

Coinbase has rolled out an onchain lending feature for USDC, allowing users to earn yields as high as 10.8% directly through its app. 

The integration, announced on Sept. 18, connects to the Morpho (MORPHO) lending protocol on Base, Coinbase’s Layer 2 network. When a user deposits USD Coin (USDC), Coinbase automatically generates a smart contract wallet that routes funds into Morpho vaults curated by Steakhouse Financial.

To maximize profits, these vaults distribute capital among lending markets. Interest starts to accrue immediately, and as long as there is liquidity, users can withdraw at any moment.

Expanding USDC utility

The rollout builds on Coinbase’s existing USDC Rewards program, which currently offers up to 4.5% APY for holding the stablecoin. By tapping into permissionless markets via Morpho, the new service provides yields more than double those rewards while keeping the familiar Coinbase interface.

The feature is initially available to users in the U.S. (excluding New York State), Bermuda, Hong Kong, the United Arab Emirates, New Zealand, the Philippines, Taiwan, and South Korea. Coinbase said broader access will follow in the coming weeks.

Morpho currently secures more than $8 billion in total value locked, highlighting demand for decentralized lending. Through this integration, Coinbase will serve as a gateway to these markets, enabling retail users to access on-chain yields without having to deal directly with complex DeFi protocols.

Building a USDC utility ecosystem on Coinbase

In 2025, Coinbase has gradually increased the range of USDC-linked services it offers. It launched USDC loans backed by Bitcoin in January, later increasing the limit to $1 million. The exchange has also expanded USDC integrations into derivatives, NFTs, and even AI-driven payments, creating what it describes as a “flywheel” effect for adoption.

USDC is still one of the most liquid and extensively used stablecoins, with over $73 billion in circulation. Coinbase’s onchain lending feature adds another use case, strengthening its bet that stablecoins will anchor mainstream adoption of crypto finance.