Morpho loan stress exposes cbXRP, but spares native XRP

The lending market on Base recorded approximately 59.2 million USDC of total debt against 119.9 million cbXRP in collateral as of November 6, 2026. A smaller 5% price decline would still expose 462 positions carrying about 3.23 million USDC of debt to liquidation.

Liquidation mechanics

cbXRP is described by Coinbase as a wrapped token backed 1:1 by native XRP held in its custody. The market's liquidation loan-to-value threshold is fixed at 62.5%, meaning as collateral prices fall, the same debt takes up a larger share of the backing.

For example, a position starting at 60% LTV would rise to 66.7% after a 10% price drop, crossing the liquidation threshold. Borrowers can either repay 10% of the debt or add about 11.1% more collateral to maintain their position.

Borrower responses

The market interface recorded repayments and collateral additions around 13:14-13:16 UTC on November 6, indicating that some positions were adjusting around the observation window. Coinbase offers optional automatic collateral protection for borrowers using its interface to Morpho on Base.

Liquidation outcomes

Once a position becomes eligible, an external liquidator can repay some or all of its debt and receive collateral plus an incentive. The exposed positions hold 12.7 million cbXRP, though the amount actually seized depends on subsequent liquidation transactions.

For XRP holders using XRP-backed credit, the immediate pressure is to keep debt supported as collateral values change. Subsequent repayments, collateral additions, and executed liquidations will determine how much of this exposure remains.