Native Bitcoin Lending

Definition ∞ Native Bitcoin lending involves the direct use of Bitcoin as both the collateral and the asset being lent, or exclusively as the collateral, within a lending protocol that operates directly on the Bitcoin blockchain or a closely integrated layer. This contrasts with wrapped Bitcoin or synthetic assets used on other chains. It aims to leverage Bitcoin’s security and decentralization for financial services.
Context ∞ The state of native Bitcoin lending is currently limited but growing, driven by innovations like the Liquid Network and emerging Layer 2 solutions that enable more complex financial primitives. A key debate concerns the security and decentralization trade-offs when adding programmability to Bitcoin. Future developments will likely involve increased adoption of trust-minimized lending protocols that operate without relying on wrapped tokens or external custodians.