Ledger has begun rolling out its Crypto Loan feature inside the Ledger Wallet application, allowing eligible users to borrow stablecoins against wrapped Bitcoin holdings without selling the underlying assets. The service connects directly to Morpho’s isolated lending markets through an integration provided by Yield.xyz.

The launch supports four Ethereum-based pairings. Borrowers can pledge either cbBTC or WBTC as collateral to obtain USDC or USDT. These are tokenized representations of Bitcoin that circulate on Ethereum rather than native BTC transferred from the Bitcoin network. Users select a collateral and loan pair, set the amount and loan-to-value ratio, then manage the position from within the wallet interface on desktop or mobile.

How the Feature Operates

Once collateral is deposited, the tokens move into Morpho smart contracts that hold the assets, track interest and account for the loan position. Ledger supplies the technology interface and describes itself as a technology provider rather than the lender. Yield.xyz handles the technical connection between the wallet and Morpho’s open credit network.

Borrowers can add collateral, repay debt, increase the borrowed amount or withdraw excess collateral while the loan remains open. Every on-chain action requires physical confirmation on a Ledger hardware signer. The device displays transaction details in human-readable form before the user approves deposits, borrowings, repayments or withdrawals.

Interest rates are variable and adjust according to utilization levels in the underlying Morpho market. Loan terms, including liquidation thresholds, are set by each individual market rather than by a single Ledger-wide standard. Availability is limited by country or region and subject to eligibility checks inside the app.

Liquidation Risk and Market Parameters

Pledged collateral remains subject to the rules of the selected Morpho market. Each market defines its own collateral asset, loan asset, price oracle and liquidation loan-to-value threshold. If the value of the collateral falls or accrued interest pushes the position above that threshold, external liquidators may repay part or all of the debt and claim the collateral along with a liquidation bonus.

Hardware signing protects the authorization of user-initiated transactions but does not prevent Morpho contracts from executing liquidations once the collateral has been deposited. Falling collateral prices or rising debt can therefore trigger liquidation even though the user’s private keys remain on the device.

The Crypto Loan product builds on an earlier Morpho-powered offering, Stablecoin Earn, which allowed users to deposit stablecoins that in turn supply liquidity available to borrowers. Ledger first outlined the borrowing feature in release notes published on October 7 before confirming the broader rollout on October 21.

Position Management Inside the Wallet

Users monitor loan-to-value ratios, adjust collateral and repay loans without leaving the Ledger Wallet environment. This removes the need to interact with a separate decentralized-finance dashboard for basic borrowing and position management. The interface supports both desktop and mobile devices.

Because the collateral resides in Morpho smart contracts for the duration of the loan, it is no longer freely spendable from the user’s wallet. Repayment restores access to the remaining collateral after the debt and interest have been settled, provided the position has not been liquidated.

Regional restrictions and eligibility requirements mean the feature is not available to every Ledger Wallet user at launch. Loan terms continue to vary by market, and borrowers face the standard risks associated with variable-rate, collateralized crypto lending, including potential loss of principal through liquidation.