As Bitcoin matures from being recognized as a risky asset to gaining acceptance at corporate and even sovereign levels as the future of digital capital, its utility in financial applications continues to expand. Bitcoin-backed loans are a key example of this evolution, allowing holders to leverage their bitcoin for liquidity without selling it. These loans build on Bitcoin’s robust security and decentralized design, creating a pathway for a financial system free from intermediaries and censorship.
Read our in-depth guide on how bitcoin-backed loans work, which explains the mechanics of these loans to help you make well-informed decisions. A helpful rule of thumb to keep in mind: loans with lower repayment rates often come with higher risks, as they typically leverage your collateral to reduce the APR.
Below, we explore some of the most notable platforms offering bitcoin-backed loans. Each has unique features, advantages, and trade-offs. It’s essential to research each one thoroughly to find the solution that best aligns with your needs.
Bitfinex
Bitfinex, established in 2012, is a well-known cryptocurrency exchange that also offers Bitcoin-backed loans through its lending platform. Bitfinex Borrow allows users to borrow funds using their bitcoin as collateral with a loan-to-value (LTV) ratio of up to 80%, one of the highest in the market. Interest rates are competitive and vary based on loan duration and market conditions.
The platform supports flexible loan terms and multiple currencies, including USD, USDT, and EUR. Borrowers maintain custody of their collateral through Bitfinex’s secure storage solutions, which utilize multi-signature wallets. However, higher LTV ratios come with increased liquidation risks, so borrowers should monitor their collateral closely. Bitfinex Borrow is available to eligible users worldwide, excluding certain restricted jurisdictions.
Debifi
Debifi is a peer-to-peer lending platform under development by Hodl Hodl, set to launch in 2025. It is designed to allow users to borrow long-term loans in fiat currencies or stablecoins using bitcoin as collateral. Loans are structured through non-custodial multi-signature smart contracts, ensuring borrowers retain control of their bitcoin while minimizing counterparty risk.
Debifi offers flexible terms where lenders and borrowers can set their own parameters, such as interest rates and repayment schedules. The platform emphasizes privacy and decentralization, requiring no KYC for participants. Borrowers should monitor their loan-to-value (LTV) ratios closely to avoid liquidation risks. Debifi aims to cater to a global audience, offering an alternative to traditional lending with a focus on censorship resistance and user autonomy.
Firefish
Firefish is a Bitcoin-focused financial platform established in 2022 and headquartered in Prague, Czech Republic. Serving primarily the European market, Firefish offers a range of services including trading, custody, and bitcoin-backed loans. Its lending product features loan-to-value (LTV) ratios of up to 50%, with interest rates determined by the loan’s duration and terms. Loan terms typically range from 3 to 18 months, providing flexibility to borrowers.
Collateral is secured in multi-signature wallets, enhancing security and minimizing counterparty risk. Firefish does not rehypothecate user bitcoin, ensuring borrowers retain full control over their assets. Loans are disbursed in EUR or CZK directly to borrowers’ bank accounts. With its transparent, no-nonsense approach, Firefish is an excellent choice for individuals in Europe seeking liquidity while preserving their bitcoin holdings. Borrowers should carefully review the terms and monitor LTV thresholds to manage potential liquidation risks.
FUJI Finance
Fuji is a Liquid-based non-custodial protocol that enables the borrowing of synthetic assets (tokens that are digital representations of derivatives), such as stablecoins and synthetic stocks or bonds, against over-collateralized bitcoin positions.
Anyone can use Fuji to borrow any asset offered on the platform after locking L-BTC (Liquid Bitcoin) as collateral in a smart contract. The smart contract creates 1 fUSD (Fuji USD) for each $1.50 worth of BTC locked. More collateral automatically decreases the risk of liquidation.
The borrower can always get the entire collateral back once the debt is settled. Repayment occurs upon burning the same amount of Fuji assets issued for this collateral, plus a small 0.25% payout for the redemption of the locked collateral.
HODL HODL
In 2023, P2P (peer-to-peer) bitcoin trading and lending company Hodl Hodl will launch the new platform Debifi, which will allow users to borrow long-term loans in stablecoins and fiat currencies using their bitcoin as collateral.
Some financial institutions have already shown interest in joining the platform as lenders. The platform already offers bitcoin-backed loans, but support by better liquidity providers such as banks should be an added benefit for Hodl Hodl and its customers.
Their current offer includes non-custodial P2P bitcoin-backed loans that both lenders and borrowers can benefit from anonymously, and by setting their own terms, including loan duration, interest rates, and currencies used.
The company creates a multisig escrow contract where the borrower’s bitcoin is held. The lender transfers the loan amount to the borrower according to the contract. When the loan is repaid, the lender releases the bitcoin back to the borrower’s wallet.
Lava
Lava is a decentralized financial platform established in 2022, offering Bitcoin-backed loans and other services such as wallet integration and trading tools. Operating primarily in the United States, Lava provides borrowers with a streamlined, non-custodial lending solution. Loans feature loan-to-value (LTV) ratios of up to 60%, with interest rates starting as low as 4%, depending on the collateral used.
Collateral is managed via trustless smart contracts, ensuring that borrowers retain full oversight of their bitcoin throughout the loan term. The platform’s transparent, KYC-free approach appeals to those who prioritize privacy and decentralization. Borrowers should carefully monitor market volatility and LTV thresholds to mitigate liquidation risks, especially in rapidly changing conditions.
Ledn
Ledn is a Canadian cryptocurrency platform that provides BTC and USDC savings accounts to its customers, who can earn interest on these assets or borrow against them. Ledn provides Proof-of-Reserve attestations overseen by an independent certified public accountant.
Clients’ privacy is preserved with a unique anonymized ID for every client reference number; the individual’s identity is never revealed to the independent accounting firm. Moreover, Ledn uses BitGo for cold storage of clients’ deposited bitcoin. In their T&C’s, they state that they may pledge, repledge, hypothecate, rehypothecate c
Ledn bitcoin-backed loans require an initial LTV ratio of 50%. When it reaches 70%, Ledn starts warning the borrower that it will liquidate enough BTC to repay part of the debt. If the LTV hits 80%, then all of the collateral Bitcoin will be liquidated unless more collateral is added to the loan.
Ledn only requires one payment at the end when the client wants to close the loan and avoids monthly interest payments, which is more convenient for the borrower.
The company has also started rolling out bitcoin mortgages in Ontario, Canada, allowing borrowers to use BTC as collateral in addition to the property’s value to secure the loan. Pairing it with the property’s value, the mortgage becomes overcollateralized, meaning that the collateral backing a loan is worth more than the loan itself, drastically reducing the chances that a loan is liquidated.
Sovryn Zero
Sovryn is a decentralized trading and lending protocol built on RSK (Rootstock). RSK is a Bitcoin side-chain that is simultaneously merge-mined with Bitcoin for enhanced security. It has a native currency called RBTC, which is meant to be a 1:1 BTC peg.
BTC conversion to RBTC is required to access Zero, a decentralized protocol that enables customers to borrow ZUSD — a USD-pegged stablecoin — with zero interest using BTC as collateral. People must still place trust in an intermediary, in this case, the centralized platform.
The Sovryn loan’s minimum collateral ratio (collateral/debt) is 110%, which means that you must keep your loan collateralized above 110% at all times, without exception. BTC must first be converted into RBTC and then transferred to the Rootstock bitcoin sidechain to be used as collateral. Sovryn claims that the Zero protocol is non-custodial, governed by stakers according to the Bitocracy protocol rules, and operated by smart contracts that users interact with in a KYC-free manner.
Unchained Capital
Unchained Capital is a bitcoin-only financial services company offering bitcoin-backed loans in the U.S. The Texas-based company was established in 2017 to offer bitcoin collaborative custody, trading, and lending.
Long-term bitcoin holders can apply for loans and get a decision rather quickly, usually within 24 hours. It provides no rehypothecation and no credit checks; all that is required is a bitcoin deposit as collateral.
Fees and interest rates are variable depending on duration, but annual percentage rates (APRs) start at 12.58%, interest rates at 11%, and origination fee at 0.75%.
Verifi21
Verifi21 is a bitcoin-only lending company set to launch for European customers in Q1 2025. The platform offers a straightforward loan application process, claiming it can be completed in approximately five minutes, with necessary KYC verification. Initially, funding will be available in USD stablecoins and Euros. Verifi21 accepts only bitcoin as collateral and does not rehypothecate client assets, ensuring that collateral is stored securely with institutional custody partners. The company conducts bi-annual proof of reserve audits to maintain transparency. While specific interest rates are yet to be announced, initial loans are expected to have a one-year term. Borrowers will be notified to top up their collateral if bitcoin’s price declines significantly, approaching a risky LTV ratio; failure to do so may result in collateral liquidation to settle the loan, with any excess returned to the client.
ZEST
Zest protocol is an on-chain bitcoin capital market that allows clients to borrow cash from liquidity providers (LPs) who join professionally managed lending pools. LPs can earn 4-6% bitcoin yield this way, while borrowers can obtain on-chain bitcoin loans directly against their balance sheets. Zest is exclusive to institutional and corporate borrowers at this stage.
Strict KYC procedures are applied to borrowers who must be approved following a standard process.
