Collateral management strategies

Understanding collateral management with Borrow

In DeFi lending, collateral management means keeping BTC collateral and using it to back stablecoins without selling your BTC. Sats Terminal Borrow streamlines this by acting as an aggregator across DeFi and CeFi lenders, so you can access the best terms for BTC-backed loans while keeping custody in your Privy wallet.

Why collateral management matters for BTC holders

• It preserves exposure to Bitcoin's upside while providing liquidity for expenses, trading, or on-ramp opportunities.
• It avoids taxable events tied to selling BTC.

How Borrow fits into your collateral management workflow

Borrow automates the heavy lifting: it bridges and wraps BTC as needed, searches lenders, and presents you with options including estimated interest rate, max LTV, and liquidation thresholds. You approve each step; Borrow never moves funds without your consent.

Practical step-by-step: Build your BTC-backed loan

1. Define your goals: decide target LTV and the amount of stablecoins you want. Lower LTV reduces liquidation risk; higher LTV increases borrowing power.

2. Create your Borrow account: sign in with email, Privy wallet is created automatically, no KYC required.

3. Prepare BTC collateral: you can specify BTC amount or desired stablecoins; Borrow will show how much collateral is needed and how it may be bridged/wrapped.

4. Compare lender offers: review terms from non-custodial lenders (Aave v3, Morpho Blue) and custodial CeFi options. Note which lenders are custodial vs non-custodial and the on-chain vs off-chain risk.

5. Execute the loan: authorize the bridging/wrapping and loan initiation. You will receive stablecoins in your self-custodial wallet once the loan is funded.

6. Monitor and manage risk: track current LTV, collateral value, and accrued interest in the Borrow dashboard. If price moves against you, you can top up BTC or repay part of the loan.

Active risk management: staying in control

• Track BTC price and your loan's LTV; plan proactive actions before liquidation thresholds are crossed.
• Consider diversifying across lenders to balance different risk profiles and rates.
• Remember: with non-custodial lenders, smart-contract risk exists; with custodial lenders, the lender's risk profile applies.

Strategy playbook: crypto loan strategies with BTC

• Liquidity while holding BTC: borrow stablecoins to cover expenses while retaining BTC upside.
• DeFi positioning: use borrowed funds to participate in yield opportunities without selling BTC.
• Cost optimization: regularly review offered rates and adjust LTV to maintain favorable terms.

Getting started with Borrow today

• No password, no seed phrase: sign in by email; a Privy self-custodial wallet is created.
• You control the keys and permissions; Borrow cannot move assets without explicit approval.
• Start by configuring your loan, depositing BTC, and selecting the lender mix that fits your collateral management goals.