Borrowing of cirBTC on the Morpho lending protocol has surpassed $190 million, according to data from the platform. The milestone comes as the main USDC market on Morpho shows extreme utilization, with about 97.4% of supplied USDC already borrowed.
Utilization leaves little room for new loans
In the main market, where users supply USDC to earn yield and borrowers post collateral, roughly 97.4% of the available USDC has been drawn down. That leaves only a sliver of liquidity for new borrowers or for suppliers looking to withdraw. Such high utilization is common in DeFi lending when demand for a specific asset spikes, but it can also push borrow rates higher and make withdrawals slower for suppliers.
The USDC borrow rate stood at 8.1% when Circle Mint opened access on Sept. 21, a date that marked a change in how users could obtain USDC directly from Circle. The timing suggests that the opening of Circle Mint may have coincided with or contributed to the tight conditions in Morpho's USDC market. Circle Mint allows eligible users to mint USDC directly with Circle, potentially altering supply dynamics on lending platforms like Morpho.
What cirBTC is and why it's in demand
CirBTC is a wrapped Bitcoin asset tied to Circle, the same company behind USDC. It allows Bitcoin holders to use their BTC in DeFi applications while potentially earning yield or using it as collateral. On Morpho, cirBTC has become a popular asset to borrow, likely because users want exposure to Bitcoin without selling their existing holdings. The $190 million in borrowing represents a significant concentration of activity in a single asset on one protocol.
The high utilization of USDC on Morpho means that borrowers are paying an 8.1% annualized rate to borrow the stablecoin. That rate could fluctuate based on supply and demand. If more suppliers add USDC to the market, the rate might fall, but if borrowing demand persists, it could rise further. For now, the market is clearly skewed toward borrowers.
Circle Mint's role in the supply picture
Circle Mint opened access on Sept. 21, giving users a direct way to create USDC. That could increase the overall supply of USDC in the ecosystem, but it doesn't guarantee that those new coins will flow into Morpho. Suppliers weigh risks, yields, and opportunity costs. If they can get better returns elsewhere, they might not deposit into Morpho's USDC market.
The fact that 97.4% of supplied USDC is already borrowed suggests that whatever USDC is in the market is being put to work. It also means that suppliers who want to withdraw their funds might face delays or need to wait for borrowers to repay. This is a standard feature of pooled lending markets, but it's worth noting when utilization gets this high.
What to watch next
The key question is whether the borrow rate will attract enough new suppliers to bring utilization down. If the rate stays at 8.1% or climbs higher, it could draw in more USDC from outside the protocol. On the other hand, if borrowing demand cools, the rate might drop, easing the pressure on liquidity.
Circle Mint's impact will also become clearer over time. If it significantly increases USDC supply, some of that could find its way into Morpho, improving conditions for both borrowers and suppliers. But if the new supply goes elsewhere, the tightness in Morpho's USDC market could persist.
For now, cirBTC borrowing remains above $190 million, and the USDC market on Morpho is running hot. The next few weeks will show whether the 8.1% rate is enough to balance the market or whether further adjustments are needed.
