According to Artemis’ reports, outstanding loans on Base peaked at an unprecedented $2.75 billion on September 10 after an increase in lending activity in late August. This record reflects the rapid growth of credit on Coinbase’s Layer 2 network and the share of Morpho and Aave in it.
Artemis writes on September 11:
Lending on @base is accelerating.
According to its prior research, lending is slowly becoming more modular as lending has now broken down into many special enterprises that each take care of some aspects of origination, distribution, risk, and infrastructure needed for this process. Base is beginning to display how this transformation appears, when taking place on a big scale.
Morpho and Aave carry most of the weight
Base’s lending total value locked (TVL) stands at approximately $4.56 billion as stated by DeFiLlama. Out of this, Morpho accounts for significantly about $3.94 billion, while active loans worth approximately $1.93 billion are given out by it. Aave V3 follows the race with TVL of around $513 million and active loans worth $354 million.
The trend is not an unusual one for Base as Galaxy’s estimate of total DeFi lending TVL was around $39.9 billion in July, with a combination of both Aave and Morpho accounting for 53.1% of the share. The total TVL according to Galaxy stood at about $13.9 billion for Aave and $7.3 billion for Morpho.
Coinbase puts DeFi lending behind a familiar button
Coinbase is bringing decentralized finance lending to those who might never experience a lending protocol first-hand. The crypto-backed loan lets qualifying customers borrow $USDC versus crypto on Coinbase’s platform. Coinbase characterizes the product as: “powered by Morpho”
This is the essence of the partnership: Coinbase manages customer relations, while Morpho provides all of the on-chain infrastructure. Even if the loan is powered by decentralized technology, the experience for borrowers seems very much like a conventional financial transaction.
Coinbase allows a maximum of $5 million in $USDC with Bitcoin in the United States but lower amounts of $USDC with some other crypto assets which comes with 86% liquidation threshold. Coinbase advertises its US rates as low as 5%.
This arrangement might account for the increase of Base’s lending capability. Instead of making users interact with DeFi themselves, Coinbase can direct lending requests to Morpho. Base’s strategy for 2026 also delivers the same message, emphasizing deeper liquidity of stablecoins through trading, borrowing. and lending.
Why the surge matters beyond Base
More lending also makes $USDC increasingly important to Base’s financial plumbing. A February analysis found that Base was a major contributor to record stablecoin transfer activity, with Morpho among the contracts generating large $USDC flows.
There is a hitch in the story. The same analysis found that around 50% of the adjusted $USDC volume of $5.3 trillion in January on Base was driven by a small number of DeFi contracts, while part of the Morpho transactions concerned flash loans, being borrowed and paid off in the same deal. Therefore, high volume does not necessarily indicate high present economic activity.
Institutional interest is still growing. According to Galaxy, Standard Chartered initiated coverage of Morpho and Aave. Morpho raised $175 million in June. Cryptopolitan also reported early this month that the outstanding loans on Morpho reached an all-time high of $5 billion which demonstrates how quickly Morpho is catching up with Aave.
The concentration question
The record also highlights a risk: Base lending is becoming increasingly dependent on a small number of protocols and collateral markets, with Coinbase emerging as an important distribution channel into Morpho. That can improve liquidity and capital efficiency, but it also makes smart-contract, oracle, curator, and collateral-risk controls more important.
For now, lending on Base is still moving higher. The next question is whether that growth can continue into the fourth quarter without becoming too dependent on one protocol, one collateral type, or one major distribution channel.
