Collateral backing a Ledger Wallet loan in wBTC or cbBTC may be liquidated if debt rises above the cutoff set by the selected Morpho market.
Eligible borrowers can pledge wrapped Bitcoin (BTC) represented by wBTC or cbBTC on Ethereum and borrow USD Coin (USDC) or Tether (USDT). The four available combinations are covered in EconoTimes’ earlier report on Ledger’s Ethereum loan markets. Bitcoin held directly on its native network is not eligible, and access depends on location and user eligibility.
The arrangement lets borrowers obtain stablecoins without selling their wrapped tokens, but leaves collateral exposed to market movements while debt remains outstanding. Borrowers pay interest, and each asset pair follows the terms of its selected Morpho market.
For every pair, Morpho uses a price oracle and a separate debt-to-collateral liquidation cutoff. The loan-to-value ratio compares the debt with the collateral’s value. A drop in collateral value or accrued interest increasing the debt can push a position above its market’s threshold.
After a position crosses that cutoff, an outside liquidator may repay part or all of the debt and receive collateral with an additional reward. The terms belong to the market the borrower selected; there is no single threshold across all Ledger Wallet loans.
Borrowers can adjust a position in the wallet by making repayments or adding collateral. Morpho’s contracts hold the pledged tokens and record the outstanding debt and interest. The selected market’s rules determine when liquidation is allowed.
Yield.xyz links the markets to Ledger Wallet, giving users access to Morpho’s lending system. Ledger supplies the interface and does not lend. Its hardware signer displays transaction details for user-initiated actions, such as depositing collateral, borrowing and repaying, but approval does not prevent liquidation once a position qualifies under the market’s rules.
Borrowing rates respond to market utilization, so the interest charged can change. Using these Bitcoin tokens also depends on a custodian and a conversion process.
