Coinbase Adds PAX Gold Collateral for USDC Loans
Coinbase opened a new borrowing option on November 6, 2026, allowing eligible customers to pledge PAX Gold tokens as collateral for USDC loans on its Base network.
Coinbase introduced a new borrowing feature on November 6, 2026, that lets eligible customers pledge PAX Gold tokens to secure USDC loans on its Base network.
The move brings tokenized gold into the Coinbase DeFi borrowing interface, powered by the Morpho protocol, and is limited to eligible United States customers outside New York.
Borrowers can pledge $PAXG to access stablecoins without selling their underlying gold position, but they assume variable-rate debt and the risk of liquidation.
How the Gold Loans Work
Coinbase provides the user interface for the loans, which are executed through Morpho’s lending protocol on the Base blockchain.
The loans are general variable-rate products with no set term, minimum payment or due date, allowing borrowers to repay partly or fully at any time.
The gold-specific launch post specifies variable rates, but it does not disclose the starting interest rate, collateral address, market identifier or liquidation threshold.
Availability and terms depend on jurisdiction, eligibility and market conditions.
Coinbase’s fee documentation states that it adds a processing fee to the principal each time a customer borrows, including when they increase an existing loan.
Interest accrues on the processing fee as part of the loan balance, so the recorded debt can differ from the amount the borrower receives.
The platform’s onchain integration terms prohibit using these loans to purchase digital assets through its website, APIs, mobile app or other Coinbase websites.
Collateral and Liquidation Risks
Coinbase’s collateral guide explains that Morpho locks the collateral when a loan opens and returns it automatically after full repayment of debt, fees and accrued interest.
The platform continues to include locked collateral in the customer’s displayed total balance without deducting the debt, which can be confusing for users.
The loan-health documentation measures loan-to-value against the collateral’s current market value and includes unpaid interest in the debt.
A falling gold-token price can push the ratio upward, while accruing interest or further borrowing can also raise it while collateral value stays unchanged.
Coinbase says the liquidation loan-to-value varies by collateral asset and directs customers to the loan management page for the threshold that applies to their position.
The gold launch posts give no such figure, unlike the Bitcoin threshold published on another Coinbase borrowing page.
The general loan-protection feature can automatically add collateral when a position reaches a trigger, but borrowers must enable it for each loan and re-enable it after use.
If available funds are insufficient, the top-up may execute only partly or fail altogether, and market volatility or technical issues can also prevent execution.
Tokenized Gold Backing
Paxos describes $PAXG as ownership of physical gold in its custody, with each token backed by one fine troy ounce stored in London LBMA vaults.
The token’s value follows the underlying metal’s market value, and Paxos offers a gold-allocation lookup that shows the bar serial number, weight and vault information.
Paxos currently charges no gold storage fee, but its creation and redemption charges apply to conversions through a Paxos account, including those involving dollars, gold bars or unallocated gold.
The issuer’s fees are separate from the processing fees and interest a customer pays to borrow against the token on Coinbase.
Morpho’s variable-rate model adjusts borrowing costs independently for each market according to utilization, the ratio of borrowed assets to supplied assets.
The protocol does not lend collateral to other borrowers by default, so a borrower posting collateral earns no supply APY.
Morpho’s variable-rate market documentation describes isolated pools that pair a collateral asset with a loan asset, with parameters fixed at creation, including its liquidation threshold and price oracle.
Once a position exceeds its liquidation threshold, Morpho allows anyone to repay part of the debt in exchange for discounted collateral, but a manipulated oracle can cause liquidation or bad debt.
The oracle supplies the posted asset’s value against the debt asset, and the token’s physical gold backing does not establish the reliability of the price feed used to value it.
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