Coinbase Expands On-Chain Lending to XRP, Cardano, Dogecoin, and Litecoin: What the Update Means for Crypto Investors
Coinbase has expanded access to its on-chain lending product, adding several high-profile cryptocurrencies to the list of eligible collateral. The update now allows users to borrow against XRP, Cardano (ADA), Dogecoin (DOGE), and Litecoin (LTC), expanding a service that was previously limited to Bitcoin and Ethereum.
For many US-based investors, the move represents a significant change in the way digital assets can be used. Instead of selling tokens to access cash, eligible customers can now borrow up to $100,000 in USDC stablecoins while retaining ownership of their cryptocurrency holdings.
The expansion reflects a broader trend in the digital asset sector: turning crypto wallets into multifunctional financial tools.
A Broader Collateral Base for Crypto Loans
Until recently, Coinbase’s on-chain lending product primarily backed Bitcoin and Ethereum as collateral. Those assets continue to offer higher borrowing thresholds, but the addition of XRP, ADA, DOGE, and LTC introduces new flexibility for altcoin holders.
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Under the updated structure, users outside of restricted jurisdictions like New York can access the service through supported Coinbase wallets. The lending process is based on smart contracts rather than traditional credit assessments.
Instead of reviewing income history or credit scores, the system evaluates the value of cryptoassets deposited as collateral. Once enough collateral is locked into the protocol, users can receive USDC almost instantly.
How the Onchain lending system works
Coinbase’s on-chain lending feature operates through the Morpho protocol on the Base network. This design merges decentralized financial infrastructure with Coinbase’s custodial interface, creating a hybrid approach to lending.
In practical terms, this is how the process goes:
A user deposits supported cryptocurrencies into a smart contract.
The protocol calculates the loan-to-value ratio based on current market prices.
If the collateral meets the required thresholds, USDC is issued to the borrower’s wallet.
The borrower retains ownership of the collateral as long as price levels remain above liquidation thresholds.
Because the system is on-chain, loan parameters are transparent and verifiable on the blockchain.
Loan-to-value and settlement parameters
The maximum loan-to-value ratio differs depending on the asset used as collateral.
Bitcoin and Ethereum continue to offer higher leverage, with up to 75 percent LTV and significantly higher borrowing limits.
In contrast, newly endorsed altcoins have more conservative thresholds.
For XRP, ADA, DOGE and LTC:
The maximum LTV is 49 percent.
Liquidation triggers occur in 62.5 percent.
The maximum loan amount is capped at $100,000 in USDC.
These stricter limits reflect the higher volatility typically associated with altcoins compared to Bitcoin and Ethereum.
If the value of the collateral falls below required thresholds, settlement mechanisms can automatically sell a portion of the crypto to repay the outstanding loan.
Key Benefits of Expanding Coinbase Onchain Lending
Avoid selling long-term holdings
One of the main advantages of borrowing against cryptocurrencies is the ability to maintain market exposure. Investors who believe in the long-term potential of their assets can access liquidity without closing positions.
This is particularly relevant during bull market cycles, when selling can mean missing out on upside potential.
No traditional credit checks
Unlike conventional bank loans, chain loans are collateral-based. Approval depends solely on the mathematical relationship between the assets deposited and the size of the loan.
This structure can make the process more accessible to users who may not qualify for traditional credit products.
Quick access to liquidity
Once the collateral is locked in the smart contract, USDC can be issued quickly. There is no long subscription process.
For investors facing urgent expenses or seeking short-term capital for other investments, this speed may be attractive.
Potential tax efficiency
In many jurisdictions, borrowing against cryptocurrencies is not considered a taxable event, while selling assets may trigger capital gains taxes.
However, tax treatment varies and users should consult qualified professionals before making decisions based on tax considerations.
A step towards a cryptocurrency-backed financial infrastructure
Industry analysts see the Coinbase upgrade as part of a broader move toward integrating decentralized finance principles into major crypto platforms.
By leveraging Morpho and the Base network, Coinbase combines the credibility of a regulated exchange with transparent blockchain-based lending logic.
The model differs from previous centralized crypto lenders that operated with opaque balance sheets and ultimately collapsed during market crashes. On-chain lending structures allow users to verify collateral ratios and settlement rules directly on the blockchain.
In this sense, the update may represent a shift towards greater transparency in the crypto lending markets.
Risks and considerations
While the benefits are notable, cryptocurrency-backed loans carry significant risk.
Market volatility
Altcoins like XRP, ADA, DOGE, and LTC are historically more volatile than Bitcoin. Rapid price declines could trigger liquidation events if borrowers do not closely monitor positions.
Settlement Mechanisms
Smart contracts automatically impose settlement thresholds. Unlike traditional loans where lenders can negotiate payment extensions, on-chain protocols are run by code.
Borrowers must actively manage collateral ratios, especially during turbulent market conditions.
Interest and fees
Although not as visible as liquidation risk, borrowing costs and protocol fees can affect the overall economics of the loan. Users should carefully review the terms before committing assets.
Regulatory environment
Cryptocurrency-backed loans operate in an evolving regulatory landscape. Future policy changes could affect availability or compliance requirements in certain states or regions.
The competitive landscape
Coinbase isn’t the only one offering cryptocurrency-backed loans, but its scale and user base give it a clear advantage.
The integration of Base, its Layer 2 network, reduces transaction costs and improves settlement speed. Meanwhile, Morpho’s decentralized structure appeals to users seeking on-chain transparency.
As the year 2026 progresses, competition between exchanges and DeFi protocols may intensify, particularly as more altcoins are added as eligible collateral.
Some analysts anticipate that additional assets could be supported in future updates, potentially expanding borrowing limits or adjusting LTV thresholds.
Convert crypto wallets into financial tools
The expansion of on-chain lending underscores a broader ambition within the crypto industry: transforming digital wallets into multifunctional financial hubs.
Instead of simply storing tokens, users can:
Loan against shares
Get performance
Business assets
Participate in bets
Interact with decentralized applications
If managed responsibly, cryptocurrency-backed loans can become an essential tool for portfolio management.
However, prudent risk management remains essential.
Financial Risk Disclaimer
This article is for informational purposes only and does not constitute financial advice.
Loans against cryptocurrencies involve significant risks, including possible liquidation and loss of principal. Asset prices can fluctuate rapidly and users may lose collateral if borrowing thresholds are exceeded.
This coverage is provided by hokanews and is not affiliated with Coinbase. Readers should conduct independent research and consult financial professionals before making cryptocurrency-backed loans.
Final evaluation
Coinbase’s expansion of on-chain lending to include XRP, Cardano, Dogecoin, and Litecoin represents a significant step forward in the evolution of crypto financial services.
By allowing eligible users to borrow up to $100,000 in USDC without selling their digital assets, the platform offers a new path to liquidity. The use of on-chain protocols improves transparency compared to previous centralized lending models.
However, the benefits come with real risk. Market volatility, settlement mechanisms and regulatory uncertainty require careful consideration.
As the cryptocurrency industry continues to mature in 2026, on-chain lending products may play an increasingly central role in how investors manage digital asset portfolios.
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