- Coinbase now offers 10.8% yields on USDC using Morpho lending with Steakhouse vaults.
- Morpho’s total value locked has reached $8.34B, showing fast growth in DeFi markets.
- The product may face regulatory review as US law on yield-bearing stablecoins evolves.
Coinbase has launched a new way for users to earn yields on USDC, marking one of its first large-scale DeFi integrations. The exchange announced Thursday that customers can now lend USDC directly within the Coinbase app through the Morpho lending protocol, with vaults curated by Steakhouse Financial. This move offers users yields of up to 10.8% APY without using third-party wallets or platforms. With this in-app DeFi layer, Coinbase plans to expand decentralized yield opportunities in the stablecoin realm.
Expanding Access Through Morpho Integration
Deposits are routed through Morpho, a top DeFi lending protocol, and leverage Coinbase’s layer-two blockchain. While it may seem like Coinbase, it is, in fact, a string of on-chain smart contracts and lending markets. This so-called “CeDeFi” model maintains the mainstream user-friendly aspect, enabling users to use decentralized lending without a private wallet or deciphering a complicated protocol.
Coinbase previously offered “USDC Rewards,” a program paying 4.1% APY, or 4.5% for Coinbase One subscribers. These rewards were funded from Coinbase’s marketing budget and did not involve lending. With the new product, lending occurs on-chain, generating higher yields tied to borrowing demand. A Coinbase spokesperson clarified, “USDC Rewards does not involve lending customer assets—it’s a customer loyalty program offered at Coinbase’s discretion.”
The USDC on-chain lending feature began rolling out on Thursday to users in the U.S. (excluding New York), Bermuda, and several international markets. In the coming weeks, access will extend to Hong Kong, the UAE, New Zealand, the Philippines, Taiwan, and South Korea.
Morpho’s Rapid Growth and Market Position
Morpho is quickly solidifying its place among the top-tier DeFi projects. According to Defillama, the TVL hit $8.34 billion in 2025, establishing strong grounds for user acceptance. Also, annualized fees are $221.1 million, while ecosystem incentives were $18.17 million. A total of $4.7 billion in assets was borrowed, indicating an extremely high-lending-demand environment. As of press time, MORPHO trades at $2.23 with a $740.58 million market cap and a fully diluted valuation of $2.23 billion.
The protocol has shown sharp growth through 2024 and 2025, and it is more dependent on decentralized lending solutions. With Coinbase entering the market and a potentially larger liquidity pool, Morpho gets more visibility, and thus, its presence in the DeFi capital markets expands.
A recent survey for the DeFi Education Fund revealed that 40% of 1,321 adults would consider a DeFi product if legislation were to be passed, hinting at a subtle inclination towards Morpho, particularly through trusted intermediaries such as Coinbase.
Related: Coinbase Joins OIF to Standardize Cross-Chain Transfers
Regulatory and Competitive Implications
The regulatory outlook remains uncertain. Stablecoin legislation in the United States, including the GENIUS Act, has created clearer frameworks for issuance and audits. Yet yield-bearing stablecoin products continue to face scrutiny. Coinbase’s earlier “Lend” initiative was halted after the SEC argued such offerings could be securities.
Competition is also intensifying. By offering nearly 11% yields on stablecoins, Coinbase pressures rivals, from exchanges to fintechs, to create similar products. Once investors become accustomed to double-digit returns on stablecoins, capital may shift rapidly.
By incorporating DeFi into mainstream exchanges like Coinbase, it may reshape stablecoin lending economics. Whether the yields remain sustainable depends on liquidity cycles, borrower demand, and the ability to manage risks inherent in decentralized markets.
