Coinbase Adopts Solana as Collateral..."Borrows 100,000 USDC Instead of Selling SOL"

▲ Solana (SOL)/AI generated image

Cryptonews reported on May 13 (local time) that Coinbase has added Solana (SOL) to the eligible collateral assets for its cryptocurrency-backed lending service. As a result, US users can now borrow up to 100,000 USDC without selling their held Solana.

This integration took place on May 12, and Solana has been included as a major collateral asset available in Coinbase's collateralized lending product, following Bitcoin (BTC) and Ethereum (ETH). This product operates with a non-custodial lending structure utilizing the Base-based Morpho protocol.

The key condition is a maximum Loan-to-Value (LTV) ratio of 70%. For example, a user holding Solana worth $10,000 can borrow up to 7,000 USDC. The Solana provided as collateral is locked in an on-chain smart contract, and there is no separate repayment deadline for the loan.

However, if the LTV ratio reaches the liquidation threshold, the position is automatically liquidated. In this case, a 4.38% penalty is applied, and the remaining collateral is returned to the user. Borrowed USDC cannot be used directly for trading on Coinbase.

Cryptonews highlighted that this move provides Solana holders with an option to secure liquidity without selling. Solana's inclusion as the third major collateral asset class after Bitcoin and Ethereum was also presented as a factor indicating a shift in its market status.

In terms of technical trends, an analysis suggested that Solana is breaking out of the $82 to $92 range and moving towards the $98 to $100 resistance zone. $94 was presented as a key support level to watch during a short-term correction, and a clear breakthrough of the $98 to $100 range would set $106 and $110 resistance levels as the next hurdles. However, Cryptonews stated that a long-term trend recovery cannot be fully confirmed until it reclaims the 200-day moving average.

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