Coinbase launches USDC lending service with 10.8% yield through DeFi integration, 2.4x increase over traditional savings product.
Leading crypto exchange Coinbase (Nasdaq: COIN) has announced a major step towards democratizing decentralized finance (DeFi) by launching a USD Coin (USDC) lending service with yields of up to 10.8%. The new product, launched on September 18, marks Coinbase’s strategic shift from a traditional intermediary to a fully integrated DeFi platform.
The service is built on Coinbase's layer-2 platform Base, combined with DeFi protocol Morpho and vault manager Steakhouse Financial to create an automated and efficient lending ecosystem. CEO Brian Armstrong emphasized the simplicity of the product, allowing users to access the benefits of DeFi without needing a deep understanding of complex blockchain technology.
The way the system works is quite sophisticated but hidden from the end user. When a customer deposits USDC, a smart contract wallet is automatically created to direct the funds into the Morpho protocol. Steakhouse Financial Vai as a strategic manager, allocating Capital to different markets to maximize profits while maintaining a reasonable level of risk.
Expanding investment opportunities for global users
The product is being rolled out gradually in the United States (excluding New York state due to regulatory restrictions), Bermuda, and several other countries, demonstrating Coinbase's global expansion ambitions in the DeFi space. This 10.8% yield is significantly higher than the 4.1% APY Coinbase currently offers for traditional USDC storage, and even surpasses the 4.5% offered to Coinbase One customers.
USDC, with a circulating supply of over $73.6 billion, is considered one of the most stable and reliable stablecoins in the market thanks to its 1:1 Peg to the USD. This stability combined with high liquidation makes it an ideal platform for DeFi lending products, minimizing the risk of price volatility while ensuring flexible Capital .
However, Coinbase has been careful to emphasize that the product is not a traditional savings account and is not insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC), reflecting the DeFi nature of the product, where high returns come with smart contract and market risks.
