Morpho Reports Record Bitcoin Borrowing on Base

Bitcoin Borrowing on Base Hits Record Amidst Coinbase Integration

Bitcoin holders utilizing Coinbase’s Ethereum Layer 2 network, Base, are now borrowing approximately $1.6 billion in USDC against their holdings through the decentralized lending protocol Morpho. This figure represents a new high for the protocol on the network.

The notable aspect of this surge in borrowing is the identity of the participants. A significant portion of this activity stems from Coinbase customers who may not even be aware they are engaging with decentralized finance (DeFi) protocols.

Record Borrowing Driven by Wrapped Bitcoin

As of mid-October 2026, outstanding USDC loans collateralized by cbBTC on Morpho’s primary market reached roughly $1.6 billion. cbBTC is a tokenized representation of Bitcoin, designed to function within on-chain applications.

Bitcoin-backed borrowing on Morpho’s Base markets has seen a substantial increase, climbing 55% year-to-date. The primary cbBTC/USDC market on Base accounts for the largest share of this activity. On October 19, 2026, this market held $3.26 billion in collateral against $1.59 billion in borrowed funds. Utilization in this market stood at 90.2% on the same date.

Declining Borrowing Costs Fuel Growth

Concurrently, the cost of borrowing has decreased. Interest rates have fallen from approximately 7.5% last year to around 5%, even as loan volumes have expanded.

Coinbase is identified as the primary driver of this growth. The exchange introduced variable-rate USDC loans, powered by Morpho, in January 2025. This integration allows customers to pledge Bitcoin and receive USDC without the need to interact directly with DeFi interfaces, connect wallets, or consult protocol documentation. Coinbase manages the user experience, while Morpho handles the underlying lending mechanics.

By September 2026, Coinbase’s variable-rate loans had facilitated over $1.4 billion in active borrowing, secured by nearly $3 billion in collateral.

Expansion with Fixed-Rate Loans

Coinbase further expanded its offerings by introducing a second option. On September 22, 2026, the exchange launched fixed-rate loans through Morpho Midnight.

Demand for these services has been fueled by users converting Bitcoin into cbBTC to use as collateral. Each conversion contributes to the market’s liquidity, channeling more Bitcoin into on-chain credit systems.

Base Becomes a Key Venue for Morpho

This surge in activity has positioned Base as a central hub for Morpho’s lending operations. Morpho deposits on Base surpassed $5 billion earlier in 2026, with a significant portion originating from Coinbase-facilitated borrowing.

For Bitcoin holders, the appeal is clear: they can access dollar liquidity without selling their cryptocurrency, and the cost of doing so has become more attractive, dropping from around 7.5% to near 5%.

For lenders providing USDC, a utilization rate close to 90% indicates that their capital is actively being deployed. High utilization typically means lenders are earning returns on most of their deposited funds, rather than having them sit idle.

However, extremely high utilization can lead to liquidity constraints. When a large portion of the lending pool is already borrowed, it can reduce the capacity for lenders wishing to withdraw their funds simultaneously.

Morpho’s growth trajectory is closely linked to Coinbase’s front-end integration, meaning the protocol’s success on Base is dependent on Coinbase’s continued development on the network.

Future Outlook

Key areas to monitor include the performance of the fixed-rate Morpho Midnight product in comparison to the variable-rate option. Utilization rates will also be a critical metric. If utilization remains near 90% and borrowing rates stay around 5%, it would suggest that lender supply is effectively meeting the demand generated by Coinbase.