- Coinbase added XRP, DOGE, ADA, and LTC to its U.S. crypto-backed loan product.
- Borrowers can take up to $100,000 in USDC; loans run on-chain via Morpho.
- The product avoids capital gains on sale but carries liquidation risk if the collateral declines.
- Collateral may be wrapped to support Ethereum compatibility, introducing technical risk.
Coinbase has expanded its U.S. crypto-backed lending service to include XRP, Dogecoin, Cardano’s ADA, and Litecoin, widening access to a liquidity tool previously limited to Bitcoin and Ether. The move brings some of the most widely held retail tokens into a product that lets users borrow without liquidating their positions.
The service allows eligible customers to pledge supported cryptocurrencies as collateral and borrow up to $100,000 in Circle’s USDC stablecoin. Loans are issued on-chain through the Morpho protocol, rather than funded directly from Coinbase’s balance sheet. The product is available across most U.S. states, excluding New York.
Expansion Targets Large Retail-Held Crypto Assets
The addition of XRP, DOGE, ADA, and LTC significantly increases the pool of eligible collateral, reflecting their broad retail ownership. Unlike certain proof-of-stake assets that generate staking rewards, these tokens generally lack native yield mechanisms, making collateralized borrowing one of the few ways holders can access liquidity without selling.
Coinbase’s regulatory filings underscore the scale of exposure tied to these assets. As of Dec. 31, the exchange reported holding $17.2 billion in XRP, underscoring both its prominence on the platform and the potential demand for credit products linked to it.
The lending system operates by matching borrowers and liquidity providers through Morpho’s decentralized infrastructure. Smart contracts manage collateralization, interest rates, and loan issuance, reducing reliance on Coinbase’s corporate balance sheet while introducing additional protocol-level mechanics.
On-Chain Lending Introduces Market and Liquidation Risks
As with other crypto-backed lending products, borrowers face liquidation risk if the value of their collateral declines sharply. When asset prices fall below required collateral thresholds, positions can be partially or fully liquidated to repay outstanding debt. Coinbase provides notifications as collateral ratios approach critical levels, but cannot prevent liquidations triggered by market volatility.
Interest rates are set dynamically by Morpho’s liquidity pools, so borrowing costs may fluctuate with market demand and available USDC supply. Price movements in XRP, DOGE, ADA, and LTC will play a central role in determining risk exposure, particularly during periods of heightened volatility.
The expansion signals Coinbase’s continued push to integrate decentralized finance infrastructure into its retail offering. By broadening collateral support beyond Bitcoin and Ether, the company is positioning its lending product as a liquidity option for a broader segment of crypto holders, while borrowers remain exposed to the underlying risks of on-chain credit markets.
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