How does Lava's USD Savings Account work?

Lava’s USD savings account allows you to earn 6.5% on your dollars by funding bitcoin-backed loans on Lava.

When you deposit into your Lava USD savings account, your dollars are lent to borrowers on Lava who borrow against their bitcoin. Because loans on Lava are over-collateralized, the dollars lent out are always more than fully backed in value by BTC locked as collateral. The yield comes from interest that is paid by borrowers, and you're only ever exposed to BTC as collateral.

When users borrow on Lava, they put up BTC as collateral to guarantee that loans are always fully backed. If the value of the bitcoin backing the loan decreases sufficiently (or if the borrower fails to repay the loan), the collateral can be liquidated, and the lender will be paid their principal plus interest from the proceeds of the sale. Lava's liquidation engine connects to all major market makers in the world to allow for best price on all trade execution. In normal circumstances, the borrower simply repays the loan plus interest back to the lender, and then collateral is returned to the borrower.

You maintain full liquidity and can deposit into or withdraw from your USD savings account at any time. Interest is automatically added to your balance and compounds monthly. Lava has built technology to handle liquidity across multiple capital sources, including institutional, to match withdrawals, liabilities, and assets.

We believe that funding bitcoin-backed loans offers the best risk-adjust rate of return on USD available in the market today. We built this product so that anyone in the world, not just institutions, can access this easily.

If you already hold a USD balance on Lava, you can easily deposit into your savings account within the app. If you're new to Lava, you can move USD onto Lava via stablecoins or bank transfer and then deposit into your savings account to start earning.