What is frequently asked questions about Borrow?

Borrow is a Bitcoin-backed stablecoin lending aggregator from Sats Terminal that lets you borrow stablecoins against BTC without selling your Bitcoin. It automatically compares offers from multiple lenders — DeFi protocols and CeFi providers — and presents the most competitive terms available.

How Borrow Works

Borrow follows a five-step flow:

1. Create an account — Users register with just an email address. No KYC or personal identification is required. A self-custodial Privy wallet is created automatically.
2. Configure the loan — Specify either BTC collateral amount or desired stablecoin quantity. Borrow surveys lending providers and presents options with estimated interest rate, fees, max LTV, liquidation price, and collateral details.
3. Deposit BTC — Send BTC from your own wallet to a unique deposit address. The system monitors Bitcoin network confirmations in real time.
4. Automatic collateral preparation — After confirmations, Borrow handles bridging, wrapping, protocol supply, and loan initiation. You approve actions beforehand; technical steps are abstracted away.
5. Receive stablecoins — Stablecoins arrive in your self-custodial wallet for hold, transfer, off-ramp, or deployment.

Why Borrow Fits Inflation-Hedging Strategies

• Liquidity without selling BTC lets you participate in potential BTC upside while maintaining exposure.
• No taxable event typically results from borrowing against BTC versus selling it.
• Transparent rate visibility: you see current rates, rate type, and lender terms before committing.

Supported Assets and Custody Models

• Collateral: native BTC with automatic bridging/wrapping to compatible forms (e.g., wBTC, BTCB, cbBTC) as required by lenders.
• Borrowable assets: stablecoins — primarily USDC; USDT available on select chains.
• Lenders: mix of non-custodial (e.g., Aave v3, Morpho Blue) and custodial CeFi partners. Borrow shows on-chain vs. off-chain custody clearly to help you choose.

Chains and Cross-Chain Ops

Borrow operates on BASE, Ethereum, Arbitrum, Polygon, Optimism, and BSC. If a lender requires a different chain than your collateral, Borrow handles cross-chain bridging automatically.

Security, Permissions, and Autonomy

• Authentication: passwordless via email with Privy.
• Wallet custody: self-custodial wallet created automatically; Borrow cannot move funds without your explicit approval.
• KYC: not required.
• Automation scope: only actions you authorize for the current loan — no actions on other assets or wallets.

Risk Highlights and Mitigation

• Smart contract risk (non-custodial loans): dependent on the underlying protocol security and governance.
• Bridging risk: cross-chain transfers introduce potential delays or bridge vulnerabilities.
• Counterparty risk (custodial lenders): depends on lender practices; collateral safety rests with the lender.
• Market risk: BTC price volatility can affect loan health; monitor LTV, add collateral, or repay as needed.

Getting Started and Practical Tips

• Use the dashboard to view each lender’s terms, including max LTV and liquidation levels.
• Adjust loan size to target a comfortable LTV. Higher LTV increases borrowing power but risk.
• Regularly review liquidations thresholds and market conditions to manage risk proactively.
• Remember: inflation-hedging benefits come from liquidity without selling BTC, not from guaranteed profit.

Frequently Asked Questions (FAQs)

Is Borrow a fully non-custodial solution?

Borrow aggregates both non-custodial and custodial lenders. Your collateral is supplied to the lender; with non-custodial lenders, execution happens via smart contracts. You always control approvals and can withdraw assets per loan settings.

Do I need to provide KYC to use Borrow?

No. Borrow requires only a passwordless email signup; no personal identification is required.

Which networks and assets are supported?

Borrow supports multiple EVM networks (BASE, Ethereum, Arbitrum, Polygon, Optimism, BSC). BTC is used as collateral, and you can borrow primarily USDC, with USDT on some chains.

How are interest rates determined?

Rates are lender-specific and can be variable or fixed. Borrow shows current rates for each lender before you accept an offer, helping you compare options.

What happens if my loan liquidates?

If the loan’s LTV crosses a lender-defined liquidation threshold, the loan may be liquidated. Borrow does not auto-adjust collateral or prevent liquidations; you should monitor market changes and manage risk accordingly.

Can I repay early or adjust loan terms?

Yes. You can repay part or all of the loan to reduce LTV. Any changes to terms or collateral are executed after your explicit approval per loan.

How does this support inflation-hedging in practice?

By providing liquidity without selling BTC, you maintain Bitcoin exposure while using borrowed stablecoins for opportunities or expenses, aligning with an inflation-hedging strategy without triggering capital gains events.