Coinbase is set to launch a new feature on its crypto platform, in partnership with Morpho and Steakhouse Financial, offering up to 10.8% returns on USDC. What should you know?
Coinbase partners with Morpho and Steakhouse Financial to offer returns on USDC
On Thursday, Coinbase unveiled a new product that generates up to 10.8% returns on the USDC stablecoin through a partnership with Morpho and Steakhouse Financial.
This is a lending product, where Steakhouse Financial manages funds lent by users in on-chain vaults on Morpho:
When Coinbase customers deposit USDC, the funds pass through Morpho vaults managed by Steakhouse Financial, which actively manages risk and allocates capital across different lending markets to optimize returns. Depositors earn income from other parties, such as customers who take out USDC loans on Coinbase, who borrow these USDC in exchange for interest payments.
Despite the more than 10% returns currently promoted by Coinbase, there are a few points to consider. As the cryptocurrency platform points out, this is the current rate, and it is subject to change.
For lending/borrowing products, the rate is effectively determined by the tension between lenders and borrowers: the more demand there is, the higher the rates. This means that in periods when the market is calmer, returns tend to decrease.
In addition, this feature is still being rolled out and will be available “in the coming weeks in the United States (excluding New York State), Bermuda, and other countries.”
It should be noted that the European Union is not mentioned here, and to understand why, we need to look at the MiCA regulation. Platforms are not allowed to offer returns on stablecoins to European customers, which brings us to the same conclusion as when USDC interest was launched on Coinbase Wallet last year.
To generate interest on their USDC, European residents can turn to on-chain solutions, either directly via the Morpho or Aave protocols, or via ZyFAI’s account abstraction solution, for example.
In parallel with Coinbase’s announcement, it should also be noted that the price of the MORPHO token is $2.23 at the time of writing, up 9.4% over the last 24 hours.
