The Bitcoin-backed loans market is expected to grow fivefold in the coming years. Cointelegraph explores the nuts and bolts of the niche industry.
On Jan. 16, Coinbase re-launched a Bitcoin-backed loan service , allowing US users to borrow USDC (USDC ) using their Bitcoin (BTC ) as collateral.
Coinbase launches BTC-backed loans. Source: @coinbase on X
Coinbase’s loan service is a mix of CeFi and DeFi. The company converts BTC into wrapped BTC (cbBTC), which it then transfers to Morpho, a DeFi protocol built on Base. The latter then manages the loan terms and interest rates dynamically.
Read more,# Bitcoin-Backed Loans Are Blasting Off!
## Key Points:
– **Fivefold Growth Ahead**: The Bitcoin-backed loans market is set to grow five times bigger – because who doesn’t love a good leverage on their crypto?
– **Coinbase’s Comeback**: On January 16, Coinbase decided to re-introduce its Bitcoin-backed loan service, giving US users a chance to borrow USDC while theirs Bitcoin plays the role of collateral.
– **A Unique Mix**: The service is the tasty cocktail of CeFi (Centralized Finance) and DeFi (Decentralized Finance). In simpler terms, it’s like mixing a cocktail with one hand and juggling flaming swords with the other.
– **Wrapped BTC**: Coinbase converts BTC into wrapped BTC, or cbBTC, before sending it to Morpho, a DeFi protocol, which takes care of the ever-fun loan terms and interest rates.
## Hot Take:
The Bitcoin-backed loan market is revving up like a Lambo on a straight road – let’s just hope it doesn’t hit a speed bump! With Coinbase dipping its toes back into BTC loans, it seems like crypto folks will soon have more ways to play with their digital assets than a toddler in a toy store. Just don’t forget, folks: borrowing can be fun, but it can also be a slippery slide into a whirlpool of regret! #CryptoLife #BitcoinLoans #JustInvestNews
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JustInvestNews, Crypto, Bitcoin, Loans, Coinbase, DeFiOriginal article: https://cointelegraph.com/news/interest-in-bitcoin-backed-loans-returns-will-trad-fi-join-this-time?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
