Morpho WETH/WBTC - Bitcoin Collateral ETH Lending

What is Morpho WETH / WBTC?

Morpho WETH / WBTC is an isolated lending market where WETH is the loan asset and wrapped Bitcoin (WBTC) serves as collateral. This market enables Bitcoin holders to access ETH liquidity for various DeFi strategies.

How This Market Works

Cross-asset lending mechanics:

WETH suppliers earn yield from borrowers
Borrowers pledge WBTC as collateral
Interest rates based on utilization
Liquidations triggered by collateral ratio drops

BTC to ETH Access: Bitcoin holders can get ETH exposure without selling BTC.

What Assets Are Involved

Supply Asset: WETH (Wrapped Ether) Collateral Asset: WBTC (Wrapped Bitcoin) Network: Ethereum mainnet Market Type: Cross-asset lending

WBTC in this market:

Stable collateral with deep liquidity
Lower volatility than many altcoins
Widely accepted across DeFi
Strong correlation with crypto market

Use Cases

Borrowers access this market for:

ETH liquidity against BTC holdings
ETH/BTC ratio trading
DeFi participation with BTC backing
Yield farming with borrowed ETH

Market Dynamics

Key characteristics:

Lower LTV than correlated assets
Both assets highly liquid
Strong borrowing demand
Moderate volatility correlation

Risk Disclosures

Smart Contract Risk: Morpho Blue, WETH, and WBTC contracts. WBTC Custody Risk: BitGo and merchant network dependencies. Price Volatility: BTC/ETH ratio can be volatile. Oracle Risk: Accurate cross-asset pricing required. Liquidation Risk: BTC/ETH divergence can trigger liquidations. Utilization Risk: WETH withdrawal timing may vary. Market Risk: Crypto market downturns affect both assets.

Morpho WETH / WBTC