Coinbase announced Thursday it will integrate the Morpho lending protocol directly into its app. The move allows users to earn yields on USDC holdings without leaving the platform.
Morpho now powers USDC lending on @coinbase.
Millions of users can earn more on USDC with sustainable yield backed by global borrowing demand — all within the Coinbase App.
Curated by @SteakhouseFi. Powered by Morpho. pic.twitter.com/eGAWanSYoZ
— Morpho 🦋 (@MorphoLabs) September 18, 2025
The integration uses vaults managed by DeFi advisory company Steakhouse Financial. Users can potentially earn up to 10.8% annual returns as of Wednesday, according to Coinbase.
This marks one of Coinbase’s first large-scale integrations with decentralized finance. The exchange currently pays up to 4.5% APY for holding USDC on its platform.
“Coinbase is only integrated with one lending protocol (Morpho) for this offering,” a company spokesperson said. Users must understand lending risks outlined in the app experience.
The new feature creates what Coinbase calls a complete onchain lending and borrowing ecosystem. When users deposit USDC, their funds are lent to borrowers including those using Coinbase’s crypto-backed loans.
The system creates a flywheel effect where lending and borrowing products support each other. Interest from borrowers generates returns for USDC depositors who can withdraw anytime without lockups.
Coinbase follows more than $900 million in loans originated through its crypto-backed loan service. The company uses what it calls the “DeFi mullet” approach with familiar interfaces powered by decentralized infrastructure.
Morpho ranks among the largest decentralized lending protocols in crypto. The protocol holds more than $8.3 billion in total value locked according to DefiLlama data.
The protocol’s dollar-denominated total value locked has climbed this year. This reflects growing demand for onchain lending among users.
A recent survey found 40% of US adults would consider using DeFi platforms if pending crypto legislation passes. The survey of 1,321 adults was conducted for the DeFi Education Fund.
DeFi lending has jumped 72% year-to-date among institutional circles according to Binance Research. The growth comes as more Americans express interest in DeFi platforms.
The integration comes as the industry faces regulatory pressure over stablecoin yields. The US GENIUS Act explicitly bans yield-bearing stablecoins.
The Bank Policy Institute urged regulators to close what it calls a loophole. The group worries exchanges might provide yield through third-party partners.
“Payment stablecoins serve a different purpose, as they neither fund loans nor are regulated as securities,” BPI said in a statement. The group represents major US banks.
Coinbase rejected claims that stablecoins undermine traditional banking. “Stablecoins don’t threaten lending — they offer a competitive alternative to banks’ $187 billion annual swipe-fee windfall,” the exchange wrote Tuesday.
Stablecoin adoption continues to accelerate with circulating supply recently surpassing $300 billion according to CoinMarketCap. The Morpho integration launched as this growth trend continues.
The post Coinbase Users Can Now Earn 10.8% on USDC Through DeFi Integration appeared first on CoinCentral.
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