Ledger’s crypto-backed loans are now directly integrated into the Ledger Wallet app, allowing eligible users to borrow stablecoins by pledging Bitcoin as collateral. Ledger announced on October 21 that its Crypto Loan feature is being rolled out, bringing borrowing and position management into the wallet interface, while collateral remains subject to smart contract liquidation rules.
Key points
- Borrowers can collateralize cbBTC or WBTC to borrow USDC or USDT on Ethereum.
- Ledger provides the interface, while the Morpho contract manages the loan.
- Hardware signing does not prevent collateral from being liquidated.
How do crypto loans work in a Ledger wallet?
Ledger’s lending guide lists four Ethereum-based pairs: users can stake cbBTC or WBTC and borrow USDC or USDT. The collateral consists of wrapped tokens on Ethereum, not native BTC transferred directly from the Bitcoin network.
This interface supports both desktop and mobile, eliminating the need for users to use a separate DeFi dashboard to borrow and manage positions. Users can select collateral and loan pairs, enter an amount, and choose a loan-to-value ratio (LTV)—the proportion of debt relative to the value of the collateral.
Borrowers can monitor their positions, add collateral, and make repayments within the app. Availability depends on eligibility and regional restrictions; Ledger recommends users check availability within the app.
Morpho handles lending and borrowing, while Yield.xyz connects the interface.
Morpho's independent lending market holds staked collateral and manages interest and position accounting. Yield.xyz connects this infrastructure to Ledger Wallet, and Ledger describes itself as a technology provider rather than a lender.
Ledger’s crypto lending extends its existing partnership with Morpho. The protocol states that this feature was launched following the introduction of Stablecoin Earn last year, with stablecoins deposited through Earn providing liquidity available to borrowers.
Ledger mentioned Crypto Loan in its release notes on October 7, prior to the listing announcement on October 21.
Hardware signing does not override loan rules.
Hardware wallet signatures can protect transaction authorization, but they cannot prevent Morpho's smart contract from liquidating collateral. Once staked, tokens are transferred into the smart contract and are no longer freely disposable assets in your wallet.
Ledger states that the hardware signer will display operations such as approval, collateral deposit, borrowing, repayment, and withdrawal in a human-readable format before user authorization.
Each lending market has fixed parameters, including the collateral token, loan token, price oracle, and liquidation LTV threshold. If a position exceeds this threshold, Morpho allows external liquidators to repay part or all of the debt in exchange for the collateral and a liquidation reward. A decline in collateral price or the accumulation of interest may cause a position to become eligible for liquidation.
Borrowing costs are not fixed: variable rates change based on the utilization of the underlying market.
Ledger's guide also notes that Bitcoin wrapping introduces custodians and conversion steps, and lists smart contract vulnerabilities and oracle failures as potential factors affecting collateral.
This article was generated with the assistance of artificial intelligence and reviewed by the editorial team.