Coinbase has originated $2.3 billion in loans backed by staked Ethereum and Solana, the company said this week. The program, which lets US investors borrow against their staked crypto without unstaking, has grown steadily since launch. But the current interest-rate environment and market swings are testing the product's risk profile.
How the loans work
Customers deposit staked ETH or SOL as collateral and receive a US dollar loan in return. The staked assets keep earning yield, while the borrower gets liquidity. Coinbase handles the liquidation if the collateral value drops too far. The model is similar to traditional margin lending but tied to the staking rewards that offset some of the borrowing cost.
The $2.3 billion milestone
Reaching that volume makes Coinbase one of the bigger players in crypto-backed lending, though the total pales next to the company's overall balance sheet. The company didn't break out how much of that came from ETH versus SOL, but both are actively supported. The loans are available only to US-based clients, which matters given how many offshore lenders have pulled back since 2022.
What could go wrong
Rising interest rates are the biggest near-term risk. If the cost of borrowing keeps climbing, it eats into the arbitrage that makes these loans attractive. Market volatility is the second threat — a sharp drop in ETH or SOL price could trigger mass liquidations. Coinbase has survived previous drawdowns, but the bigger the loan book, the harder the hit. The timing isn't great: the Fed just raised rates again this month, and crypto markets have been choppy.
The company hasn't said whether it plans to expand to other staked assets or open the program overseas. For now, the focus is managing the existing book as rate decisions and price moves pile up.
