If you’re a crypto holder who’s excited by returns and cautious about risk, this update from Coinbase might just be your next move. On September 18, 2025, Coinbase launched a new on-chain integration with Morpho allowing USDC holders to earn up to 10.8% APY directly through the app—no external wallet needed. (Coinbase)
What’s New: Lending USDC via Morpho
- Coinbase has introduced a feature that lets users lend USDC via Morpho and Steakhouse Financial, fully on-chain on Base, Coinbase’s Layer-2 network. (Coinbase)
- The yield is variable, and as of launch, it can reach 10.8% APY. (Coinbase)
- Unlike traditional CeFi savings options on USDC via Coinbase (4.1%, or up to 4.5% for Coinbase One members), this option offers significantly higher potential returns. (Coinbase)
Where It Works & How It’s Structured
- The rollout is phased. It is available in the U.S. (excluding New York State), Bermuda, and additional eligible countries. (Coinbase)
- When you deposit USDC, Coinbase creates a smart contract wallet on Base, which then routes the funds through Morpho vaults curated by Steakhouse Financial. These vaults allocate liquidity across lending markets to try to optimize yield. (Morpho)
- Withdrawals are generally possible at any time, subject to liquidity. There are no fixed lockups, though timing depends on market conditions. (Coinbase)
Why This Matters
Because:
- It bridges the gap between ease of use (easy UI and familiar Coinbase frontend) and DeFi’s higher yield opportunities. Many users won’t need to touch MetaMask or leave Coinbase. (Cointelegraph)
- It helps Coinbase build out a full on-chain lending/borrowing ecosystem. Loans that users take out (e.g. crypto-backed loans) also feed into the lending side, creating a feedback loop. (CoinDesk)
- For users holding USDC, this could be one of the best yield opportunities right now, albeit with variable risk. It’s much more competitive than traditional yield or savings with banks. (Cointelegraph)
Risks & Fine Print
It’s not without caveats:
- The APY is variable — lenders must accept that yields fluctuate depending on supply and demand. (Blockworks)
- There are liquidity risks: even though withdrawals are allowed, if many users try to pull out at once or if underlying markets get tight, delays or slippage might occur.
- Smart contract risk: Morpho is audited and fairly robust, but any DeFi protocol always carries risk of bugs or exploits. External audits help, but they don’t eliminate risk. (Cointelegraph)
- Regulatory / eligibility constraints: New York is excluded; certain countries may not get the feature; identity verification and compliance are required. (Coinbase)
How to Get Started Safely
- Check eligibility: make sure your location (e.g. U.S. but not NY, or Bermuda, or other approved country) qualifies via your Coinbase account.
- Fractional testing: try with a smaller amount first to see how yield accrues and to get comfortable with the flow.
- Monitor yields: because APY will vary, keep tabs on what you’re earning versus what you could earn elsewhere.
- Understand fees and timing: even though Base has relatively low gas / transaction fees, there will be smart contract interactions; withdrawals depend on available liquidity.
What This Means for DeFi, Coinbase & You
Ultimately, this is more than just another yield product: it’s a signal that mainstream exchanges are serious about integrating DeFi primitives directly into their user experience. Coinbase is leveraging what’s called the “DeFi mullet” architecture — familiar front-ends paired with permissionless, open-source backend infrastructure. (CoinDesk)
For you, if you’re holding USDC and want more yield without leaving Coinbase or managing external wallets, this looks compelling. Just make sure you understand risks, and don’t assume yields are fixed or guaranteed.
Conclusion
Coinbase’s Morpho integration could be a game-changer: up to 10.8% APY, no external wallet required, and a path into DeFi with much less friction. While it’s not without risk, for many USDC holders, this may be one of the best yield opportunities available right now.
If you want, I can synthesize this into a short guide for your readers (step-by-step) or even do a comparison (Coinbase vs other DeFi platforms).
Sources:
- Coinbase blog: “Earn competitive yields by lending your USDC”, September 18, 2025. (Coinbase)
- Morpho blog: “Morpho is now Powering USDC Lending on Coinbase”, September 18, 2025. (Morpho)
- Blockworks: “Coinbase adds USDC lending with Morpho on Base” (yield, eligibility, structure) (Blockworks)
- CoinTelegraph: “Coinbase taps DeFi to offer up to 10.8% yield on USDC holdings” (Cointelegraph)
- CoinDesk: “Coinbase Adds USDC Lending With Morpho and Steakhouse Financial” (CoinDesk)
