Bitcoin Lending Rates: Borrow Against BTC or Earn

Borrowing against Bitcoin vs. lending it out

“Bitcoin lending” means two different things. Borrowing against Bitcoin: you keep your BTC as collateral and borrow dollars or stablecoins, paying interest. That’s what most people are looking for, and it’s the bulk of this page. Lending out Bitcoin: you deposit BTC and earn interest from whoever borrows it. Rates for that are much lower, because far fewer people want to borrow Bitcoin itself.

LTV and liquidation, in plain terms

Loan-to-value (LTV) is your loan divided by your collateral’s value. Borrow $50,000 against $100,000 of Bitcoin and your LTV is 50%. If Bitcoin falls, your LTV rises. Past the lender’s limit you’ll get a margin call, and past the liquidation level some or all of your Bitcoin is sold to repay the loan. Starting at a lower LTV gives you more room: at 30% LTV, Bitcoin can fall by more than half before you reach 70%.

How DeFi borrowing works

On protocols such as Aave, Morpho and Compound, you deposit tokenized Bitcoin (cbBTC or WBTC, which represent BTC held by a custodian) and borrow a stablecoin like USDC. There’s no application or credit check, rates change continuously with demand, and liquidation is automatic. You pay network fees and you’re responsible for your own wallet. Coinbase’s Bitcoin-backed loans use Morpho on Base behind the scenes.