Coinbase has rolled out a new borrowing feature that lets eligible U.S. users tap up to $1 million in liquidity by posting cbETH as collateral, avoiding the need to sell or unstake their ETH. The product is now live for U.S. customers, excluding New York. Users can borrow USDC against cbETH held on Coinbase and convert the funds into dollars within the platform.
Staked ETH holders can raise cash without exiting exposure
cbETH is Coinbase’s tokenized representation of staked ether. By allowing that asset to back a loan, Coinbase is expanding the use case for staked ETH beyond passive yield collection. Borrowers can keep their exposure to ether price moves and staking rewards while pulling out liquidity for large purchases, portfolio rebalancing, or one-off expenses. For long-term stakers, that changes the trade-off between staying invested and accessing cash.
Morpho powers the lending structure onchain
The loans are powered by Morpho, an onchain lending protocol that uses smart contracts for overcollateralized borrowing. Interest rates are variable and move with market conditions. Borrowers are also allowed to repay at any time, with no fixed repayment calendar and no stated maturity date. That flexibility may appeal to users who want access to capital without locking themselves into a traditional loan schedule.
The 86% LTV threshold is the main risk point
Collateral management remains the central risk. In a previously published Coinbase blog, the company said borrowers must keep their loan-to-value ratio below 86% to avoid automatic liquidation and penalties. Because ether can move sharply, that threshold may come under pressure quickly during volatile trading periods. The product offers liquidity, but it also requires active monitoring if collateral values begin to slide.
Competition is building around staked-asset liquidity
The launch also reflects a broader race among exchanges and DeFi protocols to offer more capital-efficient borrowing products tied to staked assets. As ether staking becomes more of a long-term holding strategy than a short-term yield trade, demand has grown for ways to unlock cash from locked positions. Tokenized staking derivatives such as cbETH have seen steady adoption, especially among investors trying to reduce the opportunity cost of immobilized capital.
Coinbase said the feature is available immediately in the U.S., minus New York, and framed it as part of a wider effort to make crypto holdings more flexible during volatile market conditions without forcing outright sales.