For your crypto-backed loan, collateral refers to the asset that is held on Morpho to secure repayment of your loan. The value of your collateral relative to the outstanding amount of your loan also factors into your overall loan health.
When you borrow, the collateral crypto is locked on the Morpho protocol. When you repay your loan in full (along with any fees and accrued interest), your collateral will be returned automatically.
Add collateral (mobile app only)
Access the Coinbase mobile app.
From the My assets tab, go to Collateral and select your collateral balance.
Select Add more and follow the prompts.
You can add up to $2,400,000 in collateral value per day depending on your account’s daily usage
Note: If the main site is ever unavailable, you can add collateral through a backup site. Be sure to get your access link in advance.
Collateral and your balance
Your collateral will be included as part of your total Coinbase balance, providing a clear view of your financial standing.
Debts owed are not calculated as part of your total balance.
Example: If you have a total portfolio value of $1.1 million, with $100,000 collateralized in BTC for a $50,000 loan, your total balance will still show $1.1 million (including the locked collateral).
While the collateral will be included in your total balance, it will be marked as locked and not tradeable since it is held on-chain.
Liquidation and remaining collateral
LTV is the ratio of your outstanding loan balance to the market value of your collateral. Your loan will be liquidated automatically if it reaches the liquidation loan-to-value (LLTV) threshold of 86%. When your collateral is liquidated to repay your loan and accrued interest, an additional penalty of 4.38% is included.
Note: If your loan accrues enough interest or the value of your collateral drops, and that causes the LTV of your loan to reach 86%, then your collateral will be liquidated to repay the loan plus the penalty fee. You can partially withdraw collateral for an active loan, as long as your LTV remains below 86%.
Loan protection
If you have an active loan, you can take advantage of loan protection. Loan protection allows you to set a collateral top up amount that will automatically be applied to your loan when your loan reaches a certain LTV threshold and is at risk of liquidation.
You can enable liquidation protection on your loan from the loan management menu.
You’ll need the collateral asset available in your balance to get started.
You must enable liquidation protection for each loan. It is only applied once and then must be re-enabled. Protection expires after one year.
If you don’t have the funds available in your balance at the time it is applied, then protection may be partially applied or not applied at all.
Important
Loan protection helps lower liquidation risk, but it is not a guarantee against liquidation. Market volatility and technical issues may prevent execution, and can result in liquidation.
Under normal conditions, loans are processed as they individually breach their trigger price - typically one or a handful at a time. During market-wide price drops that simultaneously trigger many loans, the system prioritizes loans closest to liquidation so that the most at-risk users receive protection first.
Manage liquidation protection:
Navigate to the Loan Management menu, select Borrow, and choose a loan.
Select Manage and choose Liquidation Protection.
Review your LTV trigger threshold and use the slider to adjust it, if necessary.
Enter the amount you want to use as your collateral top up.
Select Confirm.
Withdraw remaining collateral after repaying loan
Access the Coinbase mobile app.
From the My assets tab, go to Collateral and select your collateral balance.
Select Withdraw and follow the prompts.