Coinbase Lets You Borrow Up to $1M Using Staked ETH

Ben Graham · January 23

Coinbase has introduced a borrowing feature allowing eligible U.S. users to access up to $1 million in USDC loans using cbETH (staked Eth) as collateral. cbETH represents staked ETH on Coinbase, enabling users to retain ETH price exposure and staking rewards without selling assets. This avoids capital gains taxes associated with sales.

It also signals how fast crypto-backed lending is moving into the mainstream. Big platforms now package DeFi-style tools for regular users.

If you believe in somΞTHing, this one's for you.

ETH-backed loans are here.

You can borrow USDC against your Ethereum, unlocking liquidity without selling.

Available now in the U.S. (ex. NY). pic.twitter.com/eOvJ2BWPfr

— Coinbase (@coinbase) November 20, 2025

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Coinbase Feature: Borrowing Against Staked ETH Without Exiting the Market

The process involves depositing cbETH into a Morpho smart contract on the Base network, where it serves as collateral. Users receive USDC instantly, which can be converted to USD within Coinbase for transfers or spending. Loans have no fixed repayment schedule, but borrowers must maintain a loan-to-value (LTV) ratio below 86% to prevent automatic liquidation. The maximum initial LTV is 75%. Interest rates are variable, determined by supply and demand on Morpho, and can rise during market stress.

Morpho operates as an on-chain lending protocol, facilitating peer-to-peer loans with smart contracts handling deposits, borrows, and liquidations. It uses oracles for real-time collateral valuation and monitors position health. If a borrower’s LTV exceeds the threshold due to ETH price drops, liquidators can repay part of the debt and seize collateral, receiving an incentive fee.

As of January 2026, Morpho has seen significant activity, contributing to over $1.25 billion in on-chain loans across the Base ecosystem.

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Onchain Lending Mechanics and the Risk Beneath the Convenience

The feature is available to verified Coinbase users in most U.S. states, excluding New York, due to regulatory restrictions. Coinbase plans to support additional collateral types beyond cbETH, building on its existing BTC-backed loans up to $5 million.

Ethereum staking has grown substantially, with approximately 36 million ETH staked as of mid-January 2026, representing about 30% of the total circulating supply. This equates to over $118 billion at current prices.

Staking rewards currently yield around 3% APR, with on-chain activity surging: daily active addresses up 112% year-over-year to 1.101 million, and new addresses doubling month-over-month to 8 million.

Coinbase Lets You Borrow Up to M Using Staked ETH - ExpertFX School — **(Source: Ycharts)**

Let’s talk about the downsides: the main danger is liquidation. Coinbase requires borrowers to keep their loan below an 86% loan-to-value ratio. And that is not a lot of margin with crypto.

If ETH drops fast, the system can sell your collateral automatically. That can lock in losses at the worst moment. ETH moves harder than stocks.

Interest rates also float with market conditions. During stress, borrowing gets expensive fast.

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Ethereum’s Growing Staked Supply Meets Credit Demand

Ethereum’s price in January has shown volatility, trading around $2,900–$3,000 after dipping below $3,000 on January 20. Technical indicators point to a short-term downtrend on 4-hour charts, with key support at $2,850 and resistance at $3,000 and $3,300. On-chain metrics remain strong, including record transaction volumes and low gas fees, but overcrowded long positions and negative taker flow suggest sellers dominate near-term.

(Source: TradingView)

For borrowers, ETH’s price fluctuations amplify risks. A sustained drop could push LTV ratios higher, triggering liquidations and forcing collateral sales at depressed prices. Conversely, if ETH holds above $3,000 and breaks resistance, it could target $3,300 in the short term, reducing liquidation threats and enhancing collateral value.

Coinbase’s integration with Morpho simplifies access to DeFi lending, similar to protocols like Aave, where users already borrow against ETH. As Ethereum adoption expands, more platforms are expected to adopt comparable models, with onchain lending volumes continuing to rise.

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