Coinbase has announced a new borrowing service that would provide users with up to $1 million in liquidity. The new borrowing service allows eligible customers to unlock up to $1 million in liquidity without unstaking their tokens by pledging their staked ether as collateral.
Coinbase has rolled out the feature on its staking platform, where traders can borrow USDC against the exchange’s representation of staked ether, cbETH. The product is available to users in the United States, excluding New York, with limited access in the United Kingdom, according to the details published on the company’s website.
Coinbase debuts cbETH collateralized lending
According to the exchange’s advertisement of the product, borrowers can request up to $1 million in USDC, with loan limits determined by the amount of eligible crypto posted as collateral and subject to loan-to-value requirements. Funds will be credited to the user’s Coinbase account immediately upon approval, while the pledged collateral is transferred on-chain to a third-party protocol.
The loans are powered by Morpho, a decentralized lending protocol that facilitates overcollateralized borrowing through smart contracts. Coinbase also disclosed that borrowers must maintain a loan-to-value ratio below 86% to avoid automatic liquidation and penalties. That threshold could come under pressure during extremely volatile market conditions for Ether, which is undoubtedly higher than for fiat currencies.
The crypto exchange would effectively extend the utility of its staked ether beyond passive yield generation by taking cbETH as collateral. Users can continue earning staking rewards while accessing liquidity for large purchases, portfolio adjustments, or one-time expenses, and other crypto lending services that exchanges issue solely to institutions.
Coinbase launched crypto staking services in New York late last year after receiving approval from the state’s Department of Financial Services. “Thanks to Governor Hochul’s leadership in embracing progress and providing clarity, this milestone marks a meaningful step forward in ensuring residents of the Empire State have access to the same economic opportunities already open to most other Americans,” the company said in a statement.
The post Coinbase now allows users borrow up to $1M staked against Ether first appeared on Coinfea.