Morpho loan stress exposes cbXRP, but spares native XRP

A 10% decline from the collateral price recorded around 13:24 UTC on Nov. 6 would make positions carrying about 8.84 million USDC of debt eligible for liquidation in a Morpho lending market on Base.

The snapshot covered 1,070 positions borrowing USDC against cbXRP, Coinbase's XRP-backed token. A smaller 5% decline would bring 462 of those positions, carrying about 3.23 million USDC of debt, to or beyond the same boundary.

For XRP holders who borrow against their tokens, further price weakness creates a choice between repaying debt, committing more collateral, or facing liquidation. Borrowing preserves exposure to the asset, while adding a financial obligation that becomes harder to support as collateral loses value.

Coinbase describes cbXRP as a wrapped token backed 1:1 by native XRP held in its custody. A holder can use an existing XRP position as collateral, so rising loan balances alone do not create new XRP purchases.

At 13:24 UTC, the market carried about 59.2 million USDC of total debt against roughly 119.9 million cbXRP in collateral. The debt inside the further-10% stress bucket represented approximately 15% of that borrowing, and the affected positions held about 12.73 million cbXRP.

Its liquidation loan-to-value threshold is fixed at 62.5%. As the collateral price falls, the same debt takes up a larger share of the backing, bringing the position closer to liquidation eligibility.