XRP loans trigger 883 liquidations, and $53M remains at risk

Liquidators on the Base blockchain seized 4.18 million cbXRP across 883 separate liquidation events between November 7 and 13, as XRP-backed borrowers repaid approximately $4 million in USDC debt. Despite these repayments, a substantial $53.5 million in debt remains outstanding, leaving borrowers vulnerable to further liquidations if XRP prices continue to decline.

Liquidation Mechanics

The liquidations occurred in a lending market where borrowers pledge cbXRP (collateralized XRP) to borrow USDC. The market operates with a 62.5% loan-to-value threshold, meaning if collateral values fall sufficiently, loans can become eligible for liquidation. Under Morpho's liquidation mechanism, outside liquidators can repay debt and receive the collateral plus an incentive.

Remaining Vulnerability

As of November 13, the Base market still carried approximately $53.5 million in USDC debt against 121.7 million cbXRP of collateral. An earlier analysis suggested that a 10% decline in oracle prices could trigger an additional $8.84 million in liquidations across 1,070 positions, assuming balances remained unchanged.

Borrowers can improve their positions by repaying debt or adding collateral, though Coinbase's guidance notes that automatic collateral protection may fail during periods of high volatility or technical issues.

Unresolved Selling Pressure

While liquidators seized cbXRP, there remains no proven link between these seized assets and subsequent native XRP selling. A specific November 10 transaction shows liquidators repaying 202,394 USDC and seizing 218,175 cbXRP, with the cbXRP then being transferred to another address in exchange for USDC and wrapped ETH.

The next critical evidence for XRP holders assessing potential selling pressure will be tracing the destination and use of seized cbXRP, followed by any traceable redemption or native XRP trades in the market.