Comparing Coinbase Loans (Morpho) Alternatives

‍This article was prepared by Ledn and includes discussion of Ledn products. Products and services mentioned may not be available in every jurisdiction.‍

Whether you are a high-net-worth Bitcoin holder or a retail investor, there may come a time when you are looking to secure a loan via your cryptoassets. The BTC lending space has been growing for some time, with new services regularly emerging as well as established giants maturing.

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Sitting in the middle of this are Coinbase loans. Despite being offered by a well-known platform, the corporation actually facilitates loans with the help of a third party, Morpho, a decentralized protocol launched in 2022. These two organizations have come together to provide a supposedly smooth lending experience to the end user. But how exactly do these Bitcoin-backed loans work, and what are some alternatives on the market right now?

What are Coinbase Loans?

Coinbase offers Bitcoin-backed loans on its website. Users can post their BTC as collateral, and in return, they can access USDC, a stablecoin that is pegged to the US dollar. However, this functionality is not offered in-house by Coinbase; rather, it has partnered with Morpho, a decentralized financial network, to provide it.

These Bitcoin-backed loans are powered by Morpho’s architecture, but are integrated into Coinbase. When you access a loan via this route, you are relying on both organizations to operate fairly and reasonably.

There are several benefits that Coinbase and Morpho derive from this coalition. For starters, it allows Coinbase to operate with Morpho’s already-established liquidity. While Coinbase has its own stores of wealth, connecting to Morpho means it does not need to access them and can keep them partitioned off for its trading functionality and other financial instruments.

Coinbase offers bitcoin-backed loans through an integration with Morpho rather than an internally developed lending protocol.

Responsibility for different aspects of the lending process may vary depending on the applicable agreements and product structure.

Are Coinbase Loans DeFi?

Yes. Coinbase’s Bitcoin-backed loans utilize both CeFi and DeFi technology. To access them, you need an account with Coinbase and you need to be verified via its KYC and AML services. Once verified, you then select the loan you are looking for and submit your BTC as collateral, stored by Coinbase.

The Coinbase app holds the BTC but hands over a DeFi-compatible asset to Morpho, known as a wrapped version of BTC. This is an asset that can operate within crypto ecosystems like Ethereum or Solana. It is called cbBTC and is managed by Coinbase. One cbBTC is designed to be equal to one BTC. This is the CeFi side of the equation.

The DeFi aspect of the loan happens under the hood. Coinbase holds your genuine BTC as collateral and releases cbBTC, a wrapped version of the asset, over to Morpho, where Morpho uses it as collateral on its own side. The Morpho network then automatically issues your loan via its architectural setup and smart contracts, meaning there is nobody on the other end officiating the loan - rather, the code simply executes.

The USDC is released from the Morpho network, passed to the Coinbase app, and then sent to the user’s exchange wallet.

Is DeFi Safe?

The prospect of DeFi can feel daunting, especially for users who tend to stick with CeFi services. The reality about DeFi is that, while it is trusted by many people, with huge numbers of individuals speaking positively about their experiences, there are some significant dangers that cannot be ignored.

Some DeFi protocols have experienced notable security incidents. Year after year, networks are compromised, leaving users in uncomfortable scenarios. Chainalysis reported that in 2025, $3.41 billion worth of assets was stolen; in 2024, $3.38 billion was lost; and in 2023, the total was $2.49 billion. The year 2026 is shaping up to follow a similar trajectory - in April, a high-profile hack targeted the KelpDAO and LayerZero protocols, leading to a loss of $290 million USD worth of funds. Most notably, this attack affected Aave, one of the leading DeFi lending services in the industry and arguably the most well-known platform in decentralized loans.

The hack, likely caused by North Korea’s Lazarus Group, involved exploiting the DeFi protocols by tricking them into unlocking a significant number of assets from their escrow services, where they were being used to facilitate wrapped assets. The hackers then secured loans with the assets over on Aave, where the network was offering an exorbitant 93% loan-to-value ratio. This flooded the network with funds that were rapidly depreciating in value because they were longer representative of the assets they were wrapping, thus harming the protocol.

This is just one example of a DeFi hack, but there are many throughout the industry. These services often employ highly novel tactics within their codebases designed to offer innovative solutions. The problem, however, is that new tools are inherently experimental; therefore, they have not been stress-tested like older, more established alternatives. 

Sometimes, hacks are caused by smart contract or protocol-level failures, but in other scenarios bad actors simply find weaker infrastructural elements. The April 2026 attack falls into the latter category. Many DeFi financial instruments have multiple moving parts; thus, there are many areas that need careful consideration.

DeFi hacks are a consistent, ever-present part of the crypto space. With the rise of AI models like Anthropic’s Mythos, which has been reported to find significant vulnerabilities in practically every major operating system and several other applications, we could be entering an age of increased hacks across the board. Considering how regularly they occur within DeFi, that could create an unsavory future.

With that being said, DeFi is not inherently dangerous. There are many services that have been appropriately audited, with code written by highly skilled and experienced developers who have a firm understanding of the ecosystem and its common attack vectors. Hacks will always make headlines, but well-operating protocols are not treated as newsworthy. 

Note as well, that CeFi services come with their own risks, especially relating to transparency and the organizations’ financial health. If a CeFi service becomes insolvent, it can affect user funds, especially if the organization did not ring-fence users’ collateral away from its other business affairs. In reality, no matter what service people engage with, they must be mindful of the inherent risks and consider seeking out organizations with strong reputations and long-standing experience in the ecosystem.

Top Five Coinbase Loan (Morpho) Alternatives

Let’s take a look at alternatives to Coinbase’s Morpho-powered Bitcoin loans. 

Lending Services at a Glance

Here are the following services, compared against each other.

Platforms were selected based on publicly available product features as of 2026. This is not investment or financial advice.

Ledn

Ledn is one option available for users looking for Bitcoin-backed loans that do not involve any DeFi protocols. Launched in 2018, Ledn offers BTC-backed loans that allow users to receive fiat currency where available, sent straight to their bank accounts. Not only does Ledn not use DeFi, but it does not use stablecoins, meaning users receive fiat for their collateral.

Ledn is also transparent, with its monthly open-book reports and biannual proof-of-reserve attestations. Additionally, as of July 2026, Ledn has not paused or frozen client withdrawals and has not publicly reported a successful security compromise affecting customer assets.

CeFi or DeFi: CeFi

Launch date: 2018

APR: 9.99% to 11.49%

LTV: 50%

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Aave

For users who are looking for a fully DeFi experience, Aave, established in 2017, is a well-respected choice for crypto loans. While the service does not collateralize BTC, it does support wrapped BTC, provided it is compatible with its network. This service requires no KYC or AML verification, as it operates entirely on-chain. For people who are comfortable working with assets that mimic BTC’s price and with stablecoins (as these are provided when collateral is locked), Aave can act as a fast and permissionless alternative to traditional finance.

CeFi or DeFi: DeFi

Launch date: 2017

APR: On average 0.36%

LTV: Up to 73%

Strike

Strike, launched in 2020, offers a Bitcoin-focused suite of tools, including loans. The service is relatively new, although it has gained traction for its streamlined solutions and flexibility. Native BTC is accepted, and fiat is released, meaning there is no need for wrapped assets or stablecoins.

CeFi or DeFi: CeFi

Launch date: 2020

APR: From 9.5%

LTV: Up to 50%

Figure

Figure provides Bitcoin-backed loans, allowing you to access fiat or stablecoins. Like Coinbase, Figure also incorporates DeFi technology into its lending service, although in a very different way. While Coinbase uses Morpho to facilitate loans, Figure utilizes decentralization in its custodial procedures. Users’ BTC is sent to a Multi-Party Computation (MPC) custody wallet, meaning it contains multiple private keys, all needed to access the funds. The user gets one set, and Figure holds the other. Money cannot leave without both partys’ consent.

CeFi or DeFi: CeFi (with DeFi elements)

Launch date: 2018

APR: 8.91%

LTV: 50%

SALT

Salt is one of the original Bitcoin lending services, operating since 2016. It focuses primarily on BTC loans, although there is also support for Ethereum, stablecoins, and its native SALT token. Its loan minimums start at $5,000, with an LTV between 30% and 70%.

CeFi or DeFi: CeFi 

Launch date: 2016

APR: 9.95% to 14.45% APR

LTV: 30-70%

Conclusion

Each platform offers different features, structures, and risks that users should evaluate based on their own circumstances. The hybrid CeFi and DeFi approach of Coinbase may not appeal to everybody, but there are multiple alternatives available in the industry. Be sure to take a look at any that seem of interest to determine if they truly are the right fit. 

Bitcoin-backed loans involve significant risk. If the value of the underlying collateral declines, borrowers may be required to add additional collateral or repay part of the loan to avoid liquidation.

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