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.
The Cypher Lending model uses MPC and immutable contracts to bypass custodial risk, establishing a truly permissionless primitive for Bitcoin's $1.3T asset base.
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