Coinbase Launches USDC Lending: 10.8% Yields, Shares Up 7%

Coinbase has rolled out a new feature that lets users earn higher yields on USD Coin (USDC) by lending through decentralized finance (DeFi). The exchange said the program offers annualized returns of up to 10.8%.

The initiative marks Coinbase’s latest push into DeFi at a time when stablecoins are gaining broader traction among both retail and institutional investors.

Coinbase Doubles USDC Payouts With New Lending Option

Coinbase’s lending option runs on Morpho, a decentralized finance protocol, where customer deposits are funneled into specialized vaults overseen by advisory firm Steakhouse Financial. The process operates on Base, Coinbase’s in-house Layer 2 blockchain. Data from DeFiLlama shows Morpho now secures more than $8 billion in assets, underscoring its role as one of the largest DeFi lenders.

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This marks a shift from fixed 4.1%–4.5% USDC Rewards to Morpho-powered onchain lending with yields up to 10.8%. Users start earning yield instantly and can withdraw funds at any time, provided liquidity is available. By embedding lending tools directly into its app, the exchange is attempting to bridge the gap between mainstream finance users and complex onchain protocols.

Unlike the loyalty-style USDC Rewards program—funded directly from Coinbase’s own budget and not tied to customer asset lending—the new feature connects deposits into DeFi protocols.

The onchain service has started with a limited group of users, with Coinbase planning a broader rollout in coming weeks across the U.S. (excluding New York), Bermuda, and several Asian and Middle Eastern markets including Hong Kong, the UAE, New Zealand, the Philippines, Taiwan, and South Korea.

Market Buzz as Coinbase Expands Into DeFi Lending

Analysts say Coinbase’s entry into onchain lending could accelerate adoption by retail users who have so far hesitated to experiment with decentralized applications. By packaging DeFi yield strategies into a regulated, familiar environment, the company may help normalize the practice of lending stablecoins for income.

DeFi lending has surged 72% year-to-date across institutional markets, according to Binance Research, reflecting growing appetite for blockchain-based credit markets. With U.S. lawmakers weighing digital asset legislation, observers believe Coinbase is positioning itself for a future where stablecoin products play a larger role in mainstream portfolios.

If successful, the rollout could make USDC not only a transactional stablecoin but also a default yield-bearing asset for millions of Coinbase customers. That shift may further cement the token’s role as one of the most widely used digital dollars in the global crypto economy.

However, analysts caution that risks remain, including smart contract vulnerabilities, liquidity shortages in volatile markets, and potential counterparty failures within DeFi protocols.

In this context, Coinbase shares closed at $343 on Thursday, up 7% from the previous day. This price represents a 111% increase compared to a year ago but remains roughly 18% below the mid-July peak of $419.