Coinbase Unlocks $1M Credit Lines Against Staked ETH (cbETH) on Base

Liquidity Without Unstaking

Coinbase quietly expanded its lending infrastructure Friday, enabling U.S. customers to post Coinbase Wrapped Staked ETH (cbETH) as collateral for USDC loans. The move allows stakers to access up to $1 million in liquidity without forfeiting staking rewards or triggering taxable sales, a feature previously ring-fenced by decentralized protocols.

The product, detailed on the exchange’s borrowing portal, essentially transforms staked Ether into a yield-bearing collateral asset. While ETH hovered around $2,945 (flat 24h) during the rollout, the update signals a clear push to capture the “buy, stake, and borrow” loop that dominated the previous cycle’s institutional strategies.

The Mechanics: Morpho on Base

Unlike the opaque, centralized lending desks of the 2022 era (BlockFi, Celsius), Coinbase is routing these loans onchain. The system is powered by Morpho, a peer-to-peer lending protocol running on Coinbase’s own L2, Base. This hybrid structure offers the user experience of a centralized exchange (CEX) with the settlement rails of DeFi.

“Borrowers must keep their loan-to-value (LTV) ratio below ~86% to avoid automatic liquidation.”

The risk parameters are strict. A maxed-out $1 million loan requires approximately $1.16 million in cbETH collateral. Because the loans have no fixed maturity date, the primary danger for borrowers is volatility management, specifically, avoiding the 86% liquidation threshold during flash crashes.

Why It Matters

This integration effectively commoditizes leverage for retail stakers. By allowing users to borrow against an asset that is already generating yield (currently ~3% APY for cbETH), Coinbase is lowering the net cost of borrowing. If a user borrows at 5% but earns 3% on collateral, the effective cost of capital drops to ~2%.

The offering is available immediately to customers in most U.S. states, though New York residents remain excluded due to the state’s BitLicense regime.