Crypto News

3 DeFi Protocols Offering 0% Interest Loans Post-Halving

What If You Could Borrow Cash Without Selling Your Bitcoin?

After the 2024 halving slashed miner rewards, savvy holders are doing exactly that. Thanks to DeFi protocols, you can now use Bitcoin as collateral to secure loans, keep your BTC, and skip the interest trap. Let’s break down three platforms making this possible (and how to avoid the risks).

Why Bitcoin Collateral Loans Are Booming Post-Halving

The Bitcoin halving reduced new supply, pushing long-term holders to seek liquidity without selling. DeFi protocols fill this gap by letting you lock up BTC as collateral for stablecoin loans. Best part? Some platforms offer 0% interest rates—if you play by their rules.

Key Drivers:

Holders refuse to sell: BTC’s post-halving price potential incentivizes “HODLing.”
Institutional DeFi adoption: BlackRock’s BUIDL fund uses similar collateral models.
Zero-interest models: Protocols profit from fees, not interest.

MakerDAO: The OG of Collateralized Loans

MakerDAO pioneered decentralized lending with its DAI stablecoin. While it’s best known for ETH collateral, its new Bitcoin Vaults let you lock BTC to mint DAI at 0% interest—if you opt for “Spark” sub-accounts.

How It Works:

Deposit BTC into a vault (minimum 150% collateral ratio).
Mint DAI stablecoins against it.
Pay a one-time stability fee (0.5–2%) instead of recurring interest.

💡 Example: Lock $15,000 in BTC → Borrow $10,000 in DAI (150% collateral).

Pros:

No monthly interest.
Trusted protocol with $8B+ in deposits.

Risks:

BTC price drops could trigger liquidation.
Complexity for beginners.

Alchemix: Self-Repaying Loans with Bitcoin

Alchemix flips the script: borrow now, repay later—automatically. Deposit BTC as collateral, take a loan in alUSD (pegged to USD), and let yield farming repay your debt over time.

0% Interest Hack:

Alchemix uses your collateral to earn yield (e.g., staking, liquidity pools).
This yield repays your loan, effectively making it interest-free.

💡 Example: Deposit 1 BTC → Borrow 50% in alUSD → Yield repays the loan in 12 months.

Pros:

No deadlines or monthly payments.
Built-in yield offsets borrowing costs.

Risks:

Yield fluctuations could slow repayment.
Limited to 50% loan-to-value (LTV).

Sovryn: Bitcoin-Native Lending on Rootstock

Sovryn operates on Rootstock (RSK), a Bitcoin sidechain. It offers 0% interest loans for BTC holders who want to borrow stablecoins like DLLR or RBTC.

How It Works:

Lock BTC in Sovryn’s vault.
Borrow up to 60% of your collateral’s value.
Pay a 0.5% origination fee (no ongoing interest).

⭐ Unique Perk: Repay loans in BTC or stablecoins.

📊 Stats: 200%+ surge in BTC collateral post-2024 halving.

Risks:

Smaller platform ($200M TVL) vs. MakerDAO.
RSK’s compatibility limitations.

How to Avoid Liquidation (Your Safety Checklist)

Zero interest doesn’t mean zero risk. Follow these rules to protect your BTC:

⚠️ Mind the LTV: Never max out your loan. Stick to 30–50% of collateral value.

📉 Monitor Prices: Use apps like DeBank for liquidation alerts.

🔄 Diversify Collateral: Mix BTC with stablecoins to reduce volatility risk.

💡 Pro Tip: Overcollateralize. Locking $20K BTC for a $10K loan cuts liquidation risk in half.

Why These Protocols Win Post-Halving

Miners need liquidity: Post-halving, miners use BTC loans to cover costs without selling.
HODLer demand: Retail investors refuse to miss BTC’s next bull run.
DeFi innovation: Competing with TradFi banks, but cheaper and faster.

Conclusion: Borrow Smart, HODL Smarter

0% interest loans are a game-changer for Bitcoin holders—but they’re not free passes. Choose protocols with strong track records, keep your LTV low, and always have a liquidation backup plan. The halving squeezed supply, but DeFi just gave BTC a new superpower: liquidity on your terms.

Disclaimer

We share experiences and research, but this is not financial, investment, or legal advice. Cryptocurrencies are volatile, and markets can change rapidly. Always consult a licensed financial advisor before making decisions. We are not responsible for any losses, damages, or legal issues arising from your use of this information. Past performance does not guarantee future results. Do your research, assess your risk tolerance, and never invest more than you can afford to lose.

📘 Learn more about stablecoin collateral models on IMF.org.
🔗 Check protocol stats on DeFiLlama.

Stay informed, stay safe.