How do I borrow against Bitcoin without selling it?

By Jamie Cooke · Published 23 October 2026 · Updated 23 October 2026

The short answer

You lock your BTC as collateral, borrow against it and keep your BTC position throughout the loan. On Diamond Hands by GVNR, the BTC stays native on Bitcoin L1 in its own isolated vault. You borrow UCD, a Bitcoin-backed stablecoin, for a one-off 3% fee over a 12-month term. Repay, and your BTC is withdrawable after 6 Bitcoin block confirmations.

Key facts

• BTC collateral stays native on Bitcoin L1, in its own isolated vault. No wrapping, no bridge, never pooled or rehypothecated.
• The cost is a one-off 3% fee on the amount borrowed, for a 12-month term. Borrow 100 UCD and you repay 103 UCD.
• The maximum LTV at opening is 66%. You choose how much to borrow up to that limit, based on your own risk appetite.
• There is no early-repayment penalty. After you repay, your BTC is withdrawable after 6 Bitcoin block confirmations.

Why borrow against Bitcoin instead of selling it?

The real cost of selling is your BTC exposure. Once you sell, any future upside is gone. Borrowing gets you the liquidity and leaves the position in place. If BTC rises while the loan is open, the gain is still yours once you repay. The cost: a one-off 3% fee, and liquidation risk if BTC falls far enough.

Picture a hypothetical: you need liquidity for a house deposit, BTC has just dropped hard, and you don't want to sell near the bottom. Galaxy Research's report on crypto leverage for Q4 2025 names "the use of BTC as collateral for stablecoin and cash loans" as one of the two main drivers of BTC borrowing demand in the over-the-counter market (Galaxy Research, 6 Mar 2026).

What are the ways to borrow against BTC?

The real question is who holds your BTC during the loan, and what you have to trust besides Bitcoin.

• A lending company. You send BTC to the lender and it sits on their balance sheet. Getting it back depends on the lender staying solvent and honouring the loan.

• Wrapped BTC on another chain. You turn BTC into a token such as wBTC on Ethereum and post that in a lending app. The BTC behind wBTC sits with a custodian, and merchants handle minting and redemption (WBTC docs). Now you rely on the custodian, the token contract and the lending app's contracts. Any bridge in the route adds bridge risk on top.

• A native Bitcoin vault. The BTC never leaves Bitcoin. It is locked as collateral where it is, with no wrapped claim and no bridge.

Diamond Hands takes the third route: self-custodial, BTC never leaves Bitcoin. Each loan has its own isolated vault, and BTC collateral is never pooled or rehypothecated.

How do you borrow against BTC on Diamond Hands?

1. Deposit BTC. It stays native on Bitcoin L1, in an isolated vault for that loan only.

2. Mint UCD. Choose how much to borrow, up to the 66% maximum LTV at opening. UCD is a Bitcoin-backed stablecoin. The 3% fee is added to the loan balance when you mint, so borrow 100 UCD and you repay 103 UCD.

3. Swap. If you need another stablecoin, swap your UCD into USDC or USDT.

4. Repay UCD. You can repay before the 12-month term ends, with no early-repayment penalty.

5. Withdraw BTC. Once the UCD is repaid, your BTC is withdrawable after 6 Bitcoin block confirmations.

How long 6 confirmations take depends on the speed of the Bitcoin network at the time. A new Bitcoin block is usually mined every 10 minutes, but network speed is outside Diamond Hands' control, so there is no fixed or guaranteed time.

Need more time? At the end of the term the loan can be extended for a further 12 months, for 3% of the outstanding debt at each annual renewal.

What are the risks?

Liquidation is the one to plan around. Your loan is tracked by its collateral ratio: the value of the BTC in the vault against the UCD you owe. Loans open at a minimum of 150%. If BTC falls and the ratio drops below 150%, the loan shows a warning, so you can act before it nears the liquidation threshold. If the threshold is breached, liquidation is full. Only specified liquidators can trigger it, currently GVNR DAO.

How much you borrow sets your buffer. Say, hypothetically, BTC drops 30% in a week. Borrow the full 66% and you open at about 151.5%, right on the 150% warning line, so even a small dip triggers a warning. A 30% drop takes that loan to about 106%, well past the point where liquidation becomes a real risk. Borrow 33% and you open at about 303%: the same 30% drop leaves you around 212%, still above the 150% opening minimum, and BTC would have to roughly halve before you got back to 150%. A sensible way to pick your LTV is to ask how far BTC could fall before you would need to act, then borrow less than that.

Diamond Hands is also still in Mainnet Beta, with a 100 UCD cap.

Frequently asked questions

Can I borrow against Bitcoin without selling it?

Yes. You lock BTC as collateral and borrow UCD against it, so you keep the position. On Diamond Hands, the BTC stays native on Bitcoin L1 in its own isolated vault, and it is withdrawable after 6 Bitcoin block confirmations once you repay.

How much can I borrow against my BTC on Diamond Hands?

The maximum LTV at opening is 66%. You choose how much to borrow up to that limit.

What does it cost to borrow on Diamond Hands?

A one-off 3% fee on the amount borrowed, for a 12-month term. Borrow 100 UCD and you repay 103 UCD. Extending for a further 12 months costs 3% of the outstanding debt at each annual renewal.

Can I repay early?

Yes. There is no early-repayment penalty for repaying before the 12-month term ends.

Sources

All checked 22 Oct 2026.

1. Galaxy Research (Zack Pokorny), "The State of Crypto Leverage – Q4 2025: Surviving a Stress Test", 6 Mar 2026: galaxy.com.
2. WBTC docs, "Mint/Burn Mechanism": docs.wbtc.network.

Related

• Open the Diamond Hands app

About the author

Jamie Cooke

Partnerships and Outreach, GVNR. LinkedIn

Jamie Cooke leads Partnerships and Outreach at GVNR, the team behind Diamond Hands. He has been active in DeFi since 2020. He spent his first couple of years learning how on-chain lending, stablecoins and Bitcoin infrastructure actually work, before joining GVNR to build its partnerships and community. He writes about Bitcoin-backed borrowing in plain terms, so people can understand how it works and how to keep control of their BTC.

Diamond Hands is a decentralised protocol. Borrowing involves risk, including liquidation of collateral. Carry projections are illustrative model outputs, not return guarantees. Nothing on this site constitutes financial advice.