DeFi Markets Update 2026-06-17
Coinbase High Yield, FLHYon as Collateral, Organic PYUSD Yield
Welcome to another DeFi Markets Update—your no-nonsense briefing on the cryptobanking plumbing and market pulse.
Steakhouse High Yield Reaches Coinbase App Users
Steakhouse High Yield USDC Edition is now live on Coinbase, alongside the existing Steakhouse USDC (v1 - 0xbeeF010f9cb27031ad51e3333f9aF9C6B1228183) option that launched in September 2025.
Through the Coinbase App, users can now select Prime for blue-chip collateral exposure or High Yield for a broader, higher-yielding collateral set, depending on the level of risk they want to take.
Coinbase High Yield expands Coinbase’s USDC lending product to include markets backed by USDe collateral from the Ethena ecosystem. This allows Coinbase lenders to earn yield from borrowing demand generated by Ethena users on Morpho.
For reference, the USDC High Yield vault, which is separate from the new Coinbase High Yield Edition but follows the same HY strategy, has earned around 4–6% APY for most of 2026, with rates moving alongside activity in the underlying Morpho markets.
The original Coinbase App-enabled Steakhouse USDC vault grew from $20m before launch to a peak of over $500m in January, and has since estabilised at around $260m.
Using FLHYon as Collateral on Morpho
FLHYon was added as eligible collateral across new FLHYon/USDC, FLHYon/USDT and FLHYon/AUSD markets on Ethereum. FLHYon is Ondo’s tokenized version of the Franklin High Yield Corporate ETF (FLHY), a ~$1.1bn fund providing exposure to U.S. high-yield corporate bonds.
FLHYon brings corporate credit exposure into our High Yield vaults, expanding the range of RWAs available across Morpho. The asset offers exposure to traditional fixed income markets through a tokenized fund structure, with the underlying fund primarily allocated to BB and B rated corporate debt.
The new markets allow FLHYon holders to borrow stablecoins while keeping exposure to the underlying bond fund. This improves capital efficiency for holders who want access to onchain liquidity alongside high-yield bond exposure.
As the borrow rate against FLHYon is lower than the yield to maturity of the FLHYon, borrowers could take a leveraged exposure. This is not without risk as FLHYon can be subject to market volatility.
The markets are already integrated with our High Yield vaults and could be rolled out to Prime vaults in the coming weeks. Each market launches with an 86% LLTV, set to account for overnight and weekend price gaps while onchain liquidity continues to build.
Organic vs Incentivised PYUSD Vaults
Our Steakhouse PYUSD Prime Instant vault has been earning the highest organic APY in the PYUSD market on Morpho for over six months.
This refers only to organic yield. The total APY of the other three vaults on Morpho was higher during parts of this period due to PYUSD incentive campaigns funded by PayPal through Merkl, which provided additional rewards on top of the underlying lending rate. Since launching in late 2025, there have been 25 PYUSD incentive campaigns that distributed rewards to depositors in these Sentora vaults.
The latest campaign distributed 35,179 PYUSD per day across the PayPal USD Main and the Sentora PRIME Main vaults. That is equivalent to approximately 246,000 PYUSD over seven days on Morpho alone.
The campaigns increase the total APY, but they do not change the underlying lending rates. As of June 15, the split between total APY, organic APY, incentive APY and vault fees was as follows:
There are currently no scheduled follow-on Merkl campaigns for these Sentora PYUSD vaults after the current campaign ends on June 18, though these campaigns are typically renewed on a weekly basis. Should incentives ever run out, deposits in those vaults would earn the underlying organic lending rate only.