Coinbase (COIN) is adding bitcoin-backed loans to its US product lineup, leaning on Morpho, the largest lending platform on its core network, to power eyeballs and wallets for its growing on-chain economy.

The lending product is not entirely new: those familiar with playing on Base have long been able to borrow USDC against their bitcoin on Morpho or via other DeFi services. What’s new here is the ease of access: Coinbase bakes Morpho’s loan books into its own wildly popular user interface, removing a critical barrier to entry.

“This is a moment where we’re planting a flag that Coinbase is coming on-chain and we’re bringing millions of users with their billions of dollars,” said Max Branzburg, head of consumer products at Coinbase.

Personal loans in the on-chain world look fundamentally different from the predominant loan agreements offered by banks and lenders. These stalwarts of the mainstream economy rely on borrowers’ credit scores when deciding whether to write a loan and determine its terms, whether or not the loan is secured.

But credit score is not a thing in crypto. Platforms like Morpho don’t have to guess how good their borrowers are for the money. Instead, they require their borrowers to provide plenty of collateral; in fact far more than the sum they are seeking to borrow. This setup protects the platforms from carrying bad debts from defaulters.

Coinbase’s setup caps each lend at $100,000 in USDC. To borrow that much money, customers need to post more than that amount of bitcoin. Morpho will start liquidating the security if the loan-to-value ratio flies too close to the sun.

“If price volatility is reaching any kind of dangerous point, we’ll share liquidation alerts through the Coinbase app so you’re aware and can trade,” Branzburg said.

Lending cash is at the bottom of all financial services, but it has extra appeal for crypto traders, who are often sitting on piles of tokens they refuse to sell. These traders often take out loans for farm airdrops and finance other risky trades. In Coinbase’s view, Morpho-facilitated loans could help borrowers pursue perhaps nobler pursuits, like buying a car or paying for a house.

Under the hood, the new setup feeds the Coinbase flywheel at each step. First, the rollout adds a new capability to Coinbase’s front end. Second, users who post BTC collateral mint cbBTC (Coinbase’s wrapped bitcoin on Base) and borrow USDC (Coinbase’s stablecoin). Third, all of this happens on Morpho (a Coinbase-funded lending platform) on top of Base (Coinbase’s Layer 2 network).