What Are the Fees and Costs on Borrow?

What Are the Fees and Costs on Borrow?

When you borrow stablecoins against your Bitcoin through Borrow by Sats Terminal, there are several types of costs to be aware of.

Because Borrow shops your loan across Aave v3, Morpho Blue, and CeFi lenders on six different chains, the exact cost stack depends on which option you pick. The comparison view in the loan configuration step lays every breakdown out side by side, so you can weigh them before you commit. Understanding these fees upfront helps you make informed decisions and choose the most cost-effective lending option.

The good news is that Borrow displays all fees transparently during the loan configuration process, so you know exactly what you will pay before committing to anything.

Types of Costs When Borrowing

There are four main categories of costs you may encounter when using Borrow:

1. Protocol interest rates — The ongoing cost of your loan
2. Gas fees — Blockchain transaction costs
3. Bridging and wrapping costs — Fees for moving BTC across chains
4. Platform service fee — Borrow's fee for the aggregation service

Let us break down each one in detail.

Protocol Interest Rates

The largest ongoing cost of any crypto loan is the interest rate charged by the lending protocol. This is expressed as an Annual Percentage Rate (APR) and represents the yearly cost of borrowing.

How Interest Rates Work

DeFi protocols like Aave v3 and Morpho Blue use algorithmic interest rates that adjust in real time based on supply and demand within each lending pool:

• High borrowing demand = Higher rates (more people competing to borrow)
• Low borrowing demand = Lower rates (less competition for available funds)
• High stablecoin supply = Lower rates (more funds available to lend)
• Low stablecoin supply = Higher rates (fewer funds available)

This means your borrowing rate can change during the life of your loan. It is not fixed like a traditional mortgage or personal loan (unless you use a CeFi lender that offers fixed rates).

Comparing Rates on Borrow

One of the primary benefits of using Borrow as an aggregator is the ability to compare rates across multiple lenders side by side. The dashboard shows you the current APR for each available protocol and chain combination, so you can choose the cheapest option.

For example, borrowing USDC against Bitcoin on Aave v3 on Ethereum might have a different rate than the same loan on Aave v3 on Arbitrum. Layer 2 chains often have slightly different rates because of differences in liquidity and borrowing demand on each chain.

How Interest Accrues

Interest on DeFi loans accrues continuously, block by block. There are no monthly payments or fixed payment schedules. The total interest you owe increases gradually over time, and you pay it all at once when you repay your loan.

For example, if you borrow 10,000 USDC at a 5% APR for 6 months, you would owe approximately 250 USDC in interest (10,000 x 0.05 x 0.5). However, since the rate is variable, the actual amount could be higher or lower depending on how rates change during that period.

Gas Fees

Gas fees are the transaction costs charged by blockchains to process your transactions. Every action on a blockchain — including depositing collateral, borrowing stablecoins, and repaying loans — requires gas.

Gas Fees by Chain

Gas costs vary significantly depending on which blockchain your loan is on:

If you are cost-conscious, borrowing on a Layer 2 blockchain like BASE or Arbitrum can significantly reduce your gas costs compared to Ethereum mainnet.

When Gas Fees Apply

Gas fees are incurred at several points in the borrowing process:

• Bridging — Moving your BTC from the Bitcoin network to an EVM chain
• Wrapping — Converting to the appropriate wrapped Bitcoin token
• Depositing collateral — Adding your wrapped BTC to the lending protocol
• Borrowing — Executing the borrow transaction to receive stablecoins
• Repaying — Paying back your loan and reclaiming collateral

Borrow's automatic collateral preparation handles most of these transactions for you, and the associated gas costs are factored into the total cost displayed during loan configuration.

Bridging and Wrapping Costs

When you deposit native Bitcoin, it needs to be moved to an EVM blockchain and converted into a compatible token format. This process involves:

Bridge Fees

A bridge transfers value from one blockchain to another. Bridge services charge a small fee for this operation, which varies by the specific bridge used and current network conditions. Borrow selects efficient bridging routes to minimize these costs.

Wrapping Costs

Converting native BTC into wrapped Bitcoin (like WBTC or cbBTC) may involve a small conversion fee. The exact cost depends on the wrapping method and the token being created.

How Borrow Handles These Costs

During the loan configuration step, Borrow calculates the total bridging and wrapping costs and includes them in the cost breakdown you see before confirming your loan. You do not need to pay these fees separately — they are deducted as part of the collateral preparation process.

Borrow Platform Service Fee

Borrow by Sats Terminal charges a service fee for providing the aggregation, automation, and user experience that simplifies the borrowing process. This fee covers:

• Rate comparison and aggregation across multiple lenders
• Automatic collateral preparation (bridging, wrapping, depositing)
• Gas fee management (you do not need to hold ETH or other gas tokens)
• Dashboard and loan management tools

The platform fee is clearly displayed during loan configuration alongside all other costs.

All of this happens in step two of the flow, before you ever send Bitcoin from your wallet. By the time you hit deposit, the protocol APR, gas, bridge, wrap, and platform fee are already locked in. Borrow is committed to transparency, so you will always know the total cost before you proceed.

Total Cost Breakdown Example

To give you a sense of what borrowing might cost, here is an illustrative example. Note that actual costs will vary based on market conditions, rates, and the specific protocol and chain you choose.

Example scenario: Borrowing 5,000 USDC against 0.15 BTC on Aave v3 on BASE

The same loan on Ethereum mainnet would have significantly higher gas fees, potentially adding 20-50 USDC or more depending on network congestion.

How to Minimize Your Borrowing Costs

Choose Layer 2 Chains

Borrowing on BASE, Arbitrum, or Optimism instead of Ethereum mainnet can reduce gas costs by 90% or more. If the rates are similar, a Layer 2 chain is almost always the cheaper choice.

Compare Rates Carefully

Use Borrow's comparison dashboard to find the lowest APR across all available protocols and chains. Even a 1% difference in APR can add up significantly over the life of a loan.

Time Your Loan Strategically

If possible, initiate your loan during periods of lower network congestion. Gas fees on all blockchains tend to be lower during off-peak hours (nights and weekends in US time zones). Borrowing demand also fluctuates, so rates may be more favorable during calmer market periods.

Monitor Your Loan

Since DeFi interest rates are variable, keep an eye on your loan's current rate through the Borrow dashboard. If rates rise significantly, you may want to repay your loan and re-borrow from a cheaper protocol.

No Surprise Fees

Borrow by Sats Terminal is committed to transparent pricing. Every cost is displayed during the loan configuration step before you deposit any Bitcoin. The platform will never charge a fee that was not disclosed upfront.

If you have questions about specific costs, you can see the full breakdown in the Borrow dashboard when configuring a loan. For more about how borrowing works, read How Does Borrow Work?, or to learn about the platform, visit What Is Borrow by Sats Terminal?.