Coinbase Launches High-Yield USDC DeFi Lending Option

Coinbase has introduced a new feature that allows users to earn higher yields on USD Coin (USDC) by lending through decentralized finance (DeFi). The program, which leverages the Morpho protocol and runs on Coinbase’s Layer 2 network Base, offers annualized returns of up to 10.8%, significantly higher than the previous fixed 4.1%–4.5% USDC Rewards.

Customer deposits are directed into specialized Morpho vaults managed by advisory firm Steakhouse Financial, enabling users to start earning instantly with the option to withdraw at any time, depending on liquidity. Unlike Coinbase’s prior rewards program, which was funded internally, this service connects directly to DeFi protocols, providing customers with real onchain yield opportunities.

Initially available to a limited group of users, the rollout will expand in the coming weeks to the U.S. (excluding New York), Bermuda, and markets across Asia and the Middle East, including Hong Kong, South Korea, Taiwan, the UAE, New Zealand, and the Philippines.

Analysts suggest this move could boost mainstream adoption of DeFi lending by offering a simple, regulated gateway for retail investors who may otherwise avoid decentralized applications. DeFi lending activity has grown 72% year-to-date, according to Binance Research, signaling strong institutional demand. By embedding lending tools into its platform, Coinbase is positioning USDC as not only a stablecoin for payments but also a default yield-bearing asset.

However, experts caution about potential risks tied to smart contract vulnerabilities, liquidity shortages, and counterparty failures within DeFi ecosystems.

Following the announcement, Coinbase (COIN) stock rose 7% to $343, marking a 111% increase year-over-year, though still 18% below its July peak of $419.