Ledger launches Crypto Loan feature using wrapped Bitcoin

Hardware wallet provider Ledger has introduced a ‘Crypto Loan’ feature within its management app, allowing users to borrow stablecoins using wrapped Bitcoin as collateral. The service utilizes the Morpho lending infrastructure and Yield.xyz for app integration.

Users can provide WBTC or cbBTC as collateral on the Ethereum network to borrow either USDC or USDT. The feature allows for position management, including adding collateral or repaying loans, directly within the Ledger app. While hardware devices are used to sign transactions and display human-readable details, the actual lending is handled by Morpho’s isolated lending markets via smart contracts.

Ledger noted that interest rates are variable based on market utilization. Users are cautioned that collateral can be liquidated if the loan-to-value (LTV) ratio exceeds specific thresholds due to price drops or accumulating interest. Additionally, using wrapped assets introduces risks related to the underlying custodians, smart contract bugs, and oracle errors.