SKN | Coinbase Lets Users Borrow Up to $1 Million Against Staked Ether Without Selling

Key Points

• Coinbase now allows eligible U.S. users (excluding New York) to borrow up to $1 million in USDC using cbETH as collateral.

• Loans are powered by on-chain protocol Morpho, feature variable rates, no fixed repayment schedule, and require loan-to-value ratios below 86%.

• The product expands the utility of staked ether, letting users retain ETH exposure and staking rewards while accessing liquidity.

Coinbase has introduced a new borrowing feature that allows customers to unlock liquidity from staked ether without selling or unstaking their holdings, marking another step toward making crypto assets more capital-efficient.

The product enables eligible U.S. users  excluding New York  to borrow up to $1 million in USDC using cbETH, Coinbase’s tokenized representation of staked ether, as collateral. Borrowed USDC can be converted directly into U.S. dollars within the platform, offering a streamlined way to access cash while maintaining long-term ETH exposure.

Turning staked ether into active collateral

The launch reflects a broader shift in how investors treat ether staking. Rather than a short-term yield strategy, staking has increasingly become a long-term allocation, creating demand for ways to access liquidity without unwinding positions.

By allowing cbETH-backed borrowing, Coinbase effectively turns staked ETH into productive collateral. Users can continue earning staking rewards and remain exposed to ether’s price movements while tapping liquidity for expenses, portfolio rebalancing, or opportunistic investments.

How the loans work

The borrowing feature is powered by Morpho, an on-chain lending protocol that facilitates overcollateralized loans through smart contracts.

Interest rates are variable and determined by market conditions, and there is no fixed repayment schedule or maturity date. Borrowers can repay at any time, offering flexibility compared with traditional credit products.

Risk management, however, is central to the product. Borrowers must keep their loan-to-value ratio below 86%. If that threshold is breached — for example during sharp declines in ether prices — the protocol can automatically liquidate collateral to cover the loan, potentially crystallizing losses.

Growing competition in staked-asset lending

Coinbase’s move comes amid intensifying competition across both centralized platforms and decentralized finance protocols to offer borrowing products tied to staked assets. Tokenized staking derivatives like cbETH have gained traction as investors seek to avoid the opportunity cost of locked capital.

The new feature positions Coinbase to compete more directly with DeFi-native lending platforms, while offering a regulated, user-friendly alternative for customers who prefer to stay within a centralized exchange environment.

Expanding flexibility without forcing sales

For long-term crypto holders, the appeal is clear: access liquidity without triggering taxable sales, forfeiting staking rewards, or exiting positions during volatile market conditions.

Coinbase said the feature is available immediately to eligible users and forms part of a broader effort to make crypto holdings more flexible and financially useful, particularly as staking and yield-bearing assets become core components of investor portfolios.