What is understanding interest rates for crypto loans?

Crypto loan rates are the ongoing cost of borrowing against BTC collateral, and on Sats Terminal you see current best offers from multiple lenders before you commit.

How rates are determined on Sats Terminal

Borrow aggregates across DeFi and CeFi lenders, including non-custodial protocols like Aave v3 and Morpho Blue, as well as custodial CeFi lenders. Each lender sets its own rate and terms, and Sats Terminal displays the current rate, whether the rate is fixed or variable, the max LTV, and any applicable fees.

Rate factors (interest rate factors)

• Lender type (non-custodial vs custodial) influences whether your loan is secured by smart contracts or by the lender's own balance sheet.
• Liquidity and demand: more liquidity tends to push rates down; high demand can push rates up.
• Collateral risk and terms: lower LTV and stronger collateral reduce risk for lenders and may reduce rates.
• Market volatility: sudden BTC price moves can prompt rate adjustments.

Borrowing costs beyond the rate

• Origination or processing fees charged by some lenders
• Bridge and wrapping costs when collateral moves across chains or protocols
• On-chain gas costs for interacting with the lending protocol

How to read the rate data on Borrow

• For each offer, see the estimated annual percentage rate (APR) or interest rate source
• Identify if the rate is variable or fixed
• Review max LTV, liquidation price, and any fees before accepting

Practical tips to minimize crypto loan costs

• Aim for a lower LTV by depositing more BTC to reduce liquidation risk and potentially lower rates
• Compare total cost across offers, not just the headline rate
• Prefer non-custodial lenders when possible to avoid custodial risk and potentially lower fees
• Monitor rate trends on the Borrow dashboard and consider timing when rates dip

Staying informed and managing risk

Even with automatic aggregation, you are responsible for monitoring liquidation risk, market moves, and lender terms. Sats Terminal makes the lender type, rate, fees, and terms transparent so you can act decisively.

FAQs

• What factors drive crypto loan rates on Sats Terminal? Rate levels are set by each lender and influenced by liquidity, demand, risk, and whether the lender is custodial or non-custodial.
• Can I lock in a fixed rate? Some lenders offer fixed-rate options; many BTC-backed loans remain variable. Sats Terminal indicates fixed vs. variable per offer.
• How can I minimize borrowing costs? Lower LTV, prioritize lenders with high liquidity, compare total cost (fees plus rate), and favor non-custodial options when appropriate.