Coinbase expands crypto-backed loans to include HYPE and ZEC

Coinbase has added HYPE and ZEC to the list of assets its users can pledge as collateral for loans, letting holders of Hyperliquid and Zcash tokens borrow up to $100,000 in USDC without triggering a taxable sale. The feature is available to eligible US users outside of New York through the Coinbase app.

The move continues a pattern of steady collateral expansion for Coinbase’s lending product, which already supports assets like XRP, DOGE, ADA, and LTC, with expansions dating back to February.

How the lending product works

Coinbase’s loan infrastructure runs on Morpho, an on-chain lending protocol. When a user posts collateral through the Coinbase app, the mechanics play out on Morpho’s markets in the background.

The risk parameters for altcoin collateral on the platform have previously been set at a maximum loan-to-value ratio of 49% and a liquidation threshold of 62.5%. In practical terms, that means if you post $10,000 worth of HYPE, you can borrow up to roughly $4,900. If the value of your collateral drops to the point where your loan represents 62.5% of what’s backing it, your position gets liquidated.

Wrapped assets pave the way

On September 1, Coinbase launched cbHYPE and cbZEC on Base, its Ethereum Layer 2 network. These are wrapped versions of HYPE and ZEC, backed one-to-one by assets held in Coinbase’s custody infrastructure.

Wrapped assets serve as DeFi-compatible representations of tokens that might otherwise face technical barriers to integration. By creating cbHYPE and cbZEC, Coinbase built the plumbing that lets these tokens flow into lending markets, liquidity pools, and other on-chain applications without requiring users to interact directly with each asset’s native chain.

The bigger lending picture

Coinbase’s lending product has processed between $1.9 billion and $3 billion in cumulative USDC loan originations since its inception.

The discussions around these additions surfaced on social media between September 27 and 29, with Morpho’s CEO among those highlighting the development. The timing suggests a coordinated rollout where the wrapped asset infrastructure launched first, followed by lending integration roughly a month later.