Coinbase is expanding its crypto-backed lending product in the U.S. to include XRP, Cardano's ADA, and Litecoin. This move allows holders of major retail tokens to borrow up to $100,000 in USDC stablecoins by using their crypto as collateral, without needing to sell their holdings.
The service, routed through the decentralized lending protocol Morpho, offers a way to unlock liquidity for assets that may not have built-in reward mechanisms like staking.
Crypto-backed loans are often marketed as a tax-efficient strategy, as borrowing does not trigger capital gains. However, users face liquidation risks if the collateral value drops significantly. Coinbase states it applies an extra buffer and sends notifications to mitigate this risk, though collateral is wrapped for use in this product.