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How Coinbase's USDC loans against PAX Gold work on Base

Coinbase began USDC loans against PAX Gold on Nov. 6 via a new USDC|PAXG market on Morpho on Base, per Morpho. Gold is its first non-crypto collateral.

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How Coinbase's USDC loans against PAX Gold work on Base - Tutorial and guide

Coinbase said on Nov. 6, 2026 that users can borrow USDC against PAX Gold (PAXG) on Coinbase, "Powered by morpho, built on base" (@coinbase). The same day, @base posted "PAXG is live on Base" and said Paxos is "bringing regulated gold to DeFi, including as collateral via Coinbase Borrow." Morpho's Nov. 6 post says Coinbase added "a new USDC|PAXG market on Morpho on Base" and calls gold the first non-crypto collateral asset in Coinbase Borrow, which already accepts BTC, ETH, XRP and SOL. The loan runs on Base.

What PAXG is

Paxos's PAX Gold page states: "Every PAXG token is backed by one fine troy ounce of London Good Delivery gold held in custody by Paxos Trust Company, N.A." Morpho describes the collateral as tokenized gold issued by Paxos.

How the loan is set up

Coinbase's help page says its crypto-backed loans let eligible customers borrow USDC with crypto as collateral, that "Borrowing is enabled by the Morpho onchain lending protocol on Base," and that Coinbase provides the interface to Morpho's protocol. PAXG now appears in that page's list of eligible collateral. The page lists gas fees as sponsored by Coinbase, and says the mobile app supports all features while the web browser covers loan setup and repayment only.

On custody, Coinbase's collateral page says that when you borrow, "the collateral crypto is locked on the Morpho protocol," and that it is returned automatically once the loan is repaid in full with fees and accrued interest. The pages we reviewed on Nov. 6 do not say whether PAXG held at Coinbase is moved or bridged to Base before it is posted, or which wallet holds it.

Morpho's post places the new market inside the existing Coinbase Borrow integration, which it says holds roughly $3.4 billion of collateral and more than $1.7 billion in active loans. Those are Morpho's own figures, and the post also compares the launch to tokenized-stock loans; our guide to borrowing against tokenized stocks on Base covers that one.

Rates, fees, limits and repayment

According to the Coinbase help page:

  • Variable rates depend on supply and demand in the lending market. Fixed rates are locked for a set term, and the page says collateral options "may vary depending on variable vs fixed interest rates." It does not say whether PAXG loans can be fixed-rate.
  • Rates may include a platform fee from Coinbase on top of the market rate. A one-time processing fee is charged each time you borrow and is added to principal.
  • Limits "vary by asset and are shown in the product." No PAXG limit is published on the pages reviewed.
  • Variable-rate loans have no set term, no minimum payments and no due dates, and can be repaid in part or in full at any time. Fixed-rate loans must be repaid by maturity.
  • Loan proceeds cannot be used for trading on Coinbase, per its terms.

Liquidation and health

Coinbase's loan health page defines loan-to-value (LTV) as the outstanding loan, including accrued interest, divided by the current market value of the collateral. Each Morpho market has a predetermined liquidation LTV (LLTV), shown in the loan overview, and the page says it varies by collateral asset. A loan is liquidated automatically when LTV reaches the market's LLTV.

The PAXG LLTV is not stated on that page or in the launch posts. Coinbase's collateral page cites 86% and a 4.38% liquidation penalty; the loan health page table uses 86%, 77% and 62.5% as examples, without tying any of them to PAXG. Check the figure in the loan overview before borrowing. The loan health page also adds a PAXG-specific note: PAXG's price "updates during gold market hours, approximately 23 hours a day on weekdays," and does not update while gold markets are closed, including weekends, "which can affect how quickly your loan health reflects current gold prices."

The health table marks 90% to 100% of the LLTV as "Danger" and says Coinbase will email a notification at that stage. An optional loan protection feature applies a collateral top-up you set in advance; Coinbase says it is "not a guarantee against liquidation."

Who can use it

The launch posts do not state eligibility. Coinbase's help page, which covers all crypto-backed loans, says they are for verified customers residing in the US (excluding New York), "with limited access in the UK, or Canada." It adds that moving to an ineligible location may affect access to existing loans. It does not give PAXG-specific eligibility.

Risks Coinbase lists

Coinbase's help page names crypto and collateral price volatility, protocol-level security vulnerabilities, protocol-level liquidity issues and Coinbase Smart Wallet issues. In its terms section, alongside a note on the Canadian service provider, the page adds that Coinbase "provides access to the Morpho protocol but does not control it."

Sources

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