Using Bitcoin Collateral Vaults
Opening a vault establishes more than a BTC balance. It connects a Bitcoin output to your Ethereum lending account and prepares the transactions that can later settle the position.
The important review happens before you commit funds or signatures: where the BTC will sit, which outcomes you authorize, and how you recover if activation does not finish.
Demo vs production
The demo lets you explore borrowing against native BTC with a modest deposit, including partial repayments, partial withdrawals and closing your position. Its settings are chosen to make participation accessible while keeping individual positions small.
| Parameter | Demo setting |
|---|---|
| Minimum deposit | 0.0004 BTC (40,000 sats) |
| Maximum deposit | 0.001 BTC (100,000 sats) |
| Maximum loan-to-value (LTV) | 30% |
| Liquidation threshold | 75% |
| Borrowing interest | 0% |
The 30% borrowing limit leaves a substantial buffer before the 75% liquidation threshold, giving positions more room to absorb Bitcoin price movements. With zero borrowing interest, you can explore the borrowing lifecycle without interest building up. Network fees still apply.
The demo uses modest USDC liquidity and caps on total borrowing to keep overall exposure limited. Smaller positions help the available liquidity reach more participants. Production lending terms and liquidity will be tailored to each supported market.
Prepare the two sides of the position
Use a supported deployment’s published Bitcoin network, Ethereum chain, assets, contract set and wallet versions. The deployment reference explains what must match; demo status records current availability. Local or historical addresses are not public deposit instructions.
You need BTC, a compatible Bitcoin wallet, an Ethereum account and ETH for gas. Borrowing and repayment use the asset specified by the lending market.
Use a wallet qualified for the deployment’s Bitcoin transaction-signing flow. Production requires review of the actual transactions and their spending conditions; a wallet’s ability to receive BTC alone is insufficient. Your private key and secret nonces remain inside your signer, outside the webpage.
Establish the address before funding
Preparation connects your Bitcoin key and Ethereum account to the position and its oracle commitments. These commitments, your key and the construction parameters determine the vault address before funding.
Check the complete construction against the proposed output. One customer key can have several vault addresses: a remainder gets its own position binding and event commitments.
The production deposit flow includes a refundable preparation stage. Before sending BTC, establish which output initially receives it, the refund delay and the public information needed to use that path if activation stops.
Review the transactions you authorize
| Review item | What it establishes |
|---|---|
| Liquidation cheques | Exact BTC allocations, recipients and event conditions. |
| Remainder and child transactions | Continued protection for the precise future outputs. |
| Release, lapse and veto templates | Separate lifecycle authorizations, including their destinations and delays. |
| Fees, anchors and net outputs | How much collateral each signed outcome actually preserves or returns. |
| Coverage period and recovery paths | Which events can authorize the cheques, and when alternative exits become usable. |
Each cheque signature fixes both its transaction and its event condition. Production review must explain those commitments; the supervised demo’s separate signing mode is disclosed on Demo status. The authorization guide explains what each approval permits.
Wait for collateral recognition
Funding, verified transaction coverage and Ethereum credit must all agree before the vault supports a loan. A visible BTC balance alone is not sufficient.
On the production proof-based deposit path, Bitcoin inclusion and confirmation depth are verified, and the output must match the script registered for the depositor, construction version and position. Beneficiary binding, replay checks, caps and coverage checks also apply. A Bitcoin proof alone does not establish that every required cheque was correctly signed.
An enabled attested-mint route has a different trust boundary and must be identified in the deployment. The reduced demo uses a capped attested route; it must not be mistaken for proof-based production minting.
Once the collateral is recognized and eligible, continue to borrowing and repayment. Reading your position explains the pending states along the way.
If opening stops midway
Keep the position’s public transaction and recovery records available outside the app. Verify your position describes their contents. These records contain public or signed artifacts, not the private key or secret nonces.
An Ethereum credit rejection is not a Bitcoin refund. Locate the unspent output and follow its actual refund or recovery path. If signing is retried, the session must preserve consumed nonce state; do not approve an unexplained replacement transaction.
For an unavailable backend, continue to Recovery.
Manage the position
Continue with Borrowing and repayment and Reading your position. Partial withdrawals and Partial liquidations explain changes that preserve the remaining loan. Closing your position covers full repayment and release.