Bitcoin drops 15% and you need cash. Selling means locking in losses and potentially missing the recovery. Borrowing against your BTC lets you access liquidity while keeping your position intact. This guide walks you through exactly how to do it on Chainflip.
What you need before starting
You need native Bitcoin in a wallet you control. That means BTC on the Bitcoin network, not wrapped versions on Ethereum or elsewhere. If you hold wBTC and want to use it as collateral, Chainflip supports that too through its v2.1 upgrade.
You also need a destination wallet for the stablecoins you borrow. Chainflip issues loans in USDC, which you can receive on Ethereum, Arbitrum, Solana, or Polkadot.
No account creation, no KYC, no email signup. You interact directly with the protocol through the lending interface.
Step 1: Connect and access the lending interface
Go to lp.chainflip.io/lending and connect your EVM wallet. You can use MetaMask, WalletConnect, or any compatible wallet. This connection manages your loan position and lets you interact with the protocol.
Your Bitcoin deposit happens separately through a generated deposit address, not through this connected wallet. The EVM wallet tracks your loan and handles repayment.
Step 2: Review your loan terms
Before depositing anything, understand what you are agreeing to. Chainflip lending currently offers a 3.13% APR with an 80% maximum loan-to-value ratio at loan creation.
The interface shows you exactly how much USDC you can borrow based on the BTC amount you plan to deposit. It also displays the liquidation threshold. If your LTV rises above a certain level due to Bitcoin price drops, your collateral gets liquidated to repay the loan.
Take a moment here. Decide how much buffer you want between your borrow amount and the liquidation point. Conservative borrowers stay well below the 80% maximum.
Step 3: Deposit your Bitcoin
The interface generates a unique Bitcoin deposit address for your loan. This is a one-time address created specifically for your position. Send your BTC to this address from your Bitcoin wallet.
The protocol detects your deposit automatically. No need to paste transaction hashes or wait for manual confirmation. Your Bitcoin is secured by validators using a decentralized custody model, not held by any centralized custodian.
Deposit confirmations typically require a few Bitcoin blocks. The interface updates when your collateral is recognized.
Step 4: Borrow stablecoins
Once your BTC collateral shows in the interface, select how much USDC you want to borrow. You can take the maximum 80% LTV or borrow less for a safer margin.
Enter your destination address for the USDC. This can be on Ethereum, Arbitrum, Solana, or Polkadot. The stablecoins are sent directly to that address through Chainflip's cross-chain infrastructure. The same system that has processed over $3 billion in cross-chain swap volume handles this transfer.
Your loan is now active. Interest accrues continuously at the stated APR.
Step 5: Monitor your position
Your loan dashboard shows current LTV, collateral value, outstanding debt, and accrued interest. Check this regularly, especially during volatile market periods.
If Bitcoin's price drops significantly, your LTV rises. You have two options to manage this: add more BTC collateral to reduce your LTV, or repay part of your loan to bring the ratio back down.
The soft liquidation mechanism gives you protection. Instead of losing your entire position at once, partial liquidations happen gradually if your LTV crosses the threshold.
Step 6: Repay and reclaim your Bitcoin
When you are ready to close your loan, connect your wallet to the lending interface. Your outstanding balance shows the principal plus any accrued interest.
Repay in USDC. You can repay from any supported chain. Once the repayment is confirmed, your Bitcoin collateral unlocks.
Enter your Bitcoin address where you want the BTC sent. The protocol releases your collateral directly to that address. Your loan position closes completely.
Why this matters for holders
The Bitcoin-backed lending market reached $8.6 billion in August 2024 and is projected to hit $45.6 billion by 2030. Demand exists because selling Bitcoin has real costs: potential tax events, transaction fees, and the risk of missing price appreciation.
Existing DeFi lending protocols like Aave hold over $4.3 billion in WBTC collateral, but they require wrapped tokens. Chainflip lets you borrow against native BTC directly, without the wrapping step or the trust assumptions that come with it.
For a deeper look at what you can actually do with borrowed funds, see the use cases guide. For the numbers on the first 90 days of lending, check the metrics recap.
The mechanics are simple. Deposit Bitcoin, borrow stablecoins, repay when ready, get your BTC back. No selling required.
Resources
Swap Now - Start swapping native assets
Lend BTC - Borrow against native Bitcoin
Blog - Product updates and announcements
Chainflip Scan - Track swaps and network activity
Website - Explore Chainflip
Other Chainflip Products:
Boost - Earn fees by providing single-sided liquidity with no IL risk
Stablecoin Strategies - Deposit stablecoins and earn optimized yields
Provide Liquidity - Supply assets to Chainflip's liquidity pools
Stake FLIP - Delegate FLIP and earn staking rewards
Find us:
What happens if Bitcoin's price drops while I have a loan?
Your loan-to-value ratio increases. If it crosses the liquidation threshold, soft liquidation kicks in, selling a portion of your collateral to reduce your debt. You can prevent this by adding more BTC collateral or repaying part of your loan.
Can I use wrapped Bitcoin like wBTC as collateral?
Yes. Chainflip's v2.1 upgrade added support for wBTC as collateral alongside native BTC. Both work through the same lending interface.
How long does the whole process take?
Depositing BTC requires standard Bitcoin network confirmations, typically 10-60 minutes depending on congestion. Once confirmed, borrowing and receiving stablecoins happens within minutes. Repayment and collateral release follow the same timeline.
Do I need to create an account or verify my identity?
No. You interact directly with the protocol using your wallets. There is no account creation, no KYC process, and no personal information required.
What stablecoins can I borrow and where can I receive them?
Loans are issued in USDC. You can receive them on Ethereum, Arbitrum, Solana, or Polkadot. Enter your destination address for whichever chain you prefer when initiating the borrow.
