Coinbase and Morpho are bringing onchain USDC lending to Brazil and Canada, letting eligible users earn up to 7.4% variable APY with no lock-up. The integration embeds decentralized credit directly in the Coinbase app, routing retail USDC deposits into Morpho vaults on Base to fund crypto-collateralized borrowers and turning idle stablecoin balances into active lending positions.
How It Works and Who Is Involved
Coinbase and Morpho power the product called DeFi Earn, or USDC Lending, which sends USDC to audited Morpho Vaults, a protocol running at a total value locked (TVL) of over $8.3 billion per DeFiLlama at least, through which vaults are carefully curated by Steakhouse Financial. Upon initiating a transaction, Coinbase creates a self-custodial wallet for signers and deposits into the vaults on Base USDC.
Borrowers, such as consumers of crypto-backed loans backed by cbBTC and cbETH, are the ones who are taking out loans and, because of this, are repaying interest rates. Real-time interest on USDC is paid back to users. Coinbase One clients who are lucky enough will be getting extra incentives in the MORPHO tokens.
Source: Bloomberg
Coinbase and Morpho launched in the US in 2025 with initial rates up to 10.8% APY, and now report nearly $500 million in total supply with recent rates up to 7.4% APY. Coinbase and Morpho offer no fixed lock-up, so users can withdraw subject to liquidity up to $5 million per user, unlike Coinbase’s USDC Rewards program, which does not lend balances.
Also Read: Coinbase Enables Promising Stablecoin Push to 1000 Banks
Why It Matters for Stablecoins and DeFi
Coinbase and Morpho are testing whether trusted interfaces can scale decentralized credit. USDC, issued by Circle, is the leading regulated dollar stablecoin with about a $74.28 billion market cap per CoinGecko in early September, and benefits from growing US clarity. Coinbase calls the design a DeFi mullet: fintech frontend, decentralized backend.
Source: LinkedIn
Coinbase and Morpho enable a simple flow: lenders supply USDC, borrowers pledge volatile collateral like cbBTC and cbETH, and interest flows onchain. Coinbase and Morpho expanded in June with a second vault using Ethena-linked markets, showing how curation can segment risk. Rates are variable and driven by demand, collateral is volatile, and smart contract and liquidity risks apply. For institutions, it provides a template for embedding permissionless protocols without external wallets. For regulators, it raises disclosure questions as banking groups scrutinise stablecoin yield.
Also Read: Coinbase DeFi Earn Expands Variable USDC Yield to Brazil
DeFi Lending Accelerates
Coinbase and Morpho’s rollout comes as onchain lending accelerates, with Binance Research reporting institutional DeFi lending up 72% year-to-date and Morpho gaining share as an alternative to prime brokerage. Brazil offers high crypto adoption, a central bank advancing Drex, and heavy stablecoin use. Canada offers a banked, yield-sensitive market where crypto-backed loans have traction.
Source: Binance
Next steps depend on local eligibility, fees, and disclosures around withdrawals and liquidation. If adoption is strong, Coinbase could expand to more vaults and regions, positioning USDC as productive collateral inside a regulated gateway to DeFi.
Also Read: MORPHO Records Largest Daily Exchange Outflow of 5.59M Tokens
Coinbase Tests Global DeFi Expansion
Coinbase and Morpho’s expansion to Brazil and Canada is more than geographic growth; it’s a test of whether DeFi can scale through trusted, licensed interfaces. Coinbase does a passive stablecoin USDC, into active collateral by routing it into audited Morpho vaults on the Base platform selected by Steakhouse Financial.
It is done without the need for active user interaction with wallets, blockchain bridges, or protocols. So far, users in the US have provided $500 million to this arrangement, with a variable interest rate up to 7.4%, and there’s an option for withdrawals at any time.
Source: Binance
Still, such a model attracts the yield-hunting crowd but, at the same time, it remains completely in users’ control. Even so, the downside is clearly DeFi-style. These are variable rates, exposure to volatile cbBTC/cbETH collateral, vulnerability to smart contracts, and liquidity limitations.
Given high adoption with the presence of a DeFi entity, Drex, in Brazil and a yield-sensitive market foundation in Canada, a successful Coinbase rollout will likely give the company permission to open up other vaults and regions, as well as introduce other types of collateral. If this works out, we can be sure that USDC, a DeFi staple in 70 plus USD cap of 420 million US dollars, will be a major productive resource in connecting regulated financial services and the decentralized, permissionless lending world.
Also Read: MORPHO Price Eyes $2.60 Breakout as Whale Activity and Network Growth Surge
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