Coinbase Achieves $1 Billion in On-Chain Bitcoin-Backed Loans in 8 Months
Coinbase has reached a significant milestone by surpassing $1 billion in on-chain Bitcoin-backed loan originations just eight months after launching the product in January 2025. CEO Brian Armstrong has set a lofty goal of achieving $100 billion in lifetime originations, signaling the platform’s ambitions in the crypto lending space.
The current run rate for Coinbase’s loan originations is around $125 million per month, highlighting the pace required to meet the new target. These loans involve posting Bitcoin collateral on the chain through Coinbase-wrapped Bitcoin (cbBTC), which is then directed to a Morpho market on Base. Interest rates are variable and set every block based on utilization, with USDC being delivered to borrowers’ Coinbase accounts.
In the event that the loan-to-value ratio reaches 86 percent, liquidation may occur. Repayment does not have a fixed schedule, and Coinbase specifies a 4.38 percent liquidation penalty in its customer materials. Borrowers are required to maintain over-collateralization at all times, with availability limited to the U.S. excluding New York for now.
According to Coinbase documentation, cbBTC is backed 1:1 by Bitcoin under custody, with public proof-of-reserves and published canonical addresses. The scalability of the platform plays a crucial role in origination capacity, as it is dependent on dollar liquidity and throughput. Total deposits have increased to the low tens of billions over the summer, with Coinbase-connected collateral surpassing $1 billion and active loans reaching hundreds of millions during mid-year.
The macro credit landscape has been favorable for asset-backed structures, with decentralized lending reaching $26.47 billion in the second quarter of 2025. This represents a 42 percent increase quarter over quarter, demonstrating the growing demand for crypto-backed lending solutions.
Looking ahead, Coinbase’s $100 billion target will require consistent growth rates. Calculations show that achieving this milestone by 2030 would necessitate approximately 7.7 percent compounded monthly growth from the current base. Factors such as collateral price movements and liquidity spikes pose risks to the platform, with liquidation occurring automatically on-chain in case of breaches in the loan-to-value ratio.
In conclusion, Coinbase’s foray into on-chain Bitcoin-backed loans has shown promising growth potential. The platform’s focus on scalability, risk management, and rate sensitivity will be key in achieving its ambitious $100 billion target in the coming years. Stay tuned for further updates on Coinbase’s lending initiatives and how they are reshaping the crypto lending landscape.