DeFi Fundamentals
importance of collateral loans
Loans backed by collateral, typically crypto assets, enabling borrowers to obtain liquidity without selling the asset.
A liquidity option using crypto collateral to borrow stablecoins without selling the underlying asset.
Bridge financing for cryptocurrency holders is a liquidity option that uses crypto collateral—typically BTC—to borrow stablecoins, preserving exposure to crypto while raising cash for emergencies or opportunities. This bridge financing approach lets you access funds without selling your BTC, supporting crypto investments during market volatility.
Options to bridge liquidity include selling BTC, taking margin loans, or pursuing traditional loans. In practice, bridging financing is commonly offered by both DeFi lenders (non-custodial) and CeFi partners (custodial). Sats Terminal positions itself as an option within this landscape: it aggregates rates across multiple lenders, showing you current terms, risk, and LTV before you commit. By comparing crypto loans across networks, you can choose what aligns with your risk tolerance during an emergency-liquidity scenario.
In short, bridge financing provides faster access to liquidity while maintaining custody of your assets via self-custodial wallets and preserving your crypto investments without a taxable sale.
Related Terms
DeFi Fundamentals
Loans backed by collateral, typically crypto assets, enabling borrowers to obtain liquidity without selling the asset.
DeFi Fundamentals
A Bitcoin-backed loan lets you borrow stablecoins using BTC as collateral, preserving your crypto exposure while gaining liquidity.
Lending & Borrowing
Loan-to-value (LTV) is the ratio of a borrowed amount to the collateral value used to secure it, used to gauge risk and liquidation thresholds in BTC-backed loans.
Lending & Borrowing
The proportion of a loan to the collateral's value, expressed as a percentage.
Common Questions
Bridge financing is a liquidity option that uses crypto collateral to borrow stablecoins or other assets without selling your crypto. It involves both DeFi and CeFi lenders, and tools like Sats Terminal help compare terms before borrowing.