Lava’s Bitcoin Line of Credit (BLOC) empowers Bitcoin holders to unlock dollar liquidity for major purchases like US real estate—without selling their BTC or triggering taxable events. With BLOC, you can borrow up to 50% of your Bitcoin’s value at fixed rates starting around 5% APR, pay a simple 2% annual capital charge based only on your highest balance, and enjoy open-ended terms with no monthly payments. The process is fast, globally available, and designed for maximum flexibility: you can use your Lava Card to spend directly from your line and even earn rewards. Lava’s transparent, user-first approach means you keep your Bitcoin upside, stay agile in a competitive real estate market, and don’t get rugged by hidden fees or forced timelines. This article is authored by the Lava team, reflecting their commitment to Bitcoin-native financial freedom and practical, actionable guidance for the Bitcoin community.
What is a Bitcoin-backed loan for real estate? * It’s a loan that lets you use your Bitcoin as collateral to access dollars for property purchases, so you don’t have to sell your BTC (source: Lava Blog).
How does Lava’s BLOC differ from a traditional mortgage? * BLOC is a flexible credit line against your BTC with no monthly payments or fixed term—you control when and how much to repay.
What happens if Bitcoin’s price drops while I have a BLOC? * Your loan-to-value (LTV) ratio rises; you may need to add more BTC as collateral or repay part of your balance. Severe price drops can trigger liquidation (FAQ: Lava FAQ).
Are Bitcoin-backed loans taxable? * Borrowing against BTC is generally not taxable, but using BTC to pay interest/principal or if your BTC is liquidated to repay the loan, those are taxable events. Always consult a tax professional.
Can I close on a home using a Lava BLOC? * Yes, BLOC provides documented dollar liquidity for down payments or cash offers, and can be coordinated with your lender or title company.
Lava’s BLOC is ideal for Bitcoiners who want to preserve their long-term thesis, move fast in real estate markets, and avoid capital gains taxes from selling BTC. “A bitcoin-backed line of credit allows you to unlock dollars against your BTC so you can fund a home purchase while retaining your bitcoin exposure” (source). For more details, see the full article or reach out to the Lava team.
Ready to unlock your Bitcoin’s purchasing power? Sign up for Lava BLOC in minutes and join the Bitcoin-native financial revolution.
Lava offers fixed interest rates, providing cost certainty for borrowers. Coinbase offers variable rates via on-chain money markets, which can fluctuate unpredictably.
Lava is available globally with loans up to $1B+. Coinbase lending is restricted to the US (excluding NY) with a $5M limit.
Coinbase’s lending product is built on Morpho, a DeFi money market using smart contracts on the Ethereum L2 Base. Lava does not require the use of an L2.
Lava offers automated protection that moves idle BTC to collateral at 70% LTV. Coinbase requires manual intervention to add collateral during market dips.
Users can initiate a loan on Lava in under 5 seconds with no documentation. Coinbase requires full account verification.
Lava is a dedicated platform for Bitcoin. Coinbase is a broad exchange supporting thousands of assets.
Lava offers live human customer support for all customers, while Coinbase has limited automated support.
Introduction
Borrowing against your bitcoin allows you to access liquidity without selling your bitcoin or triggering a taxable event. However, not all lending platforms are created equal. The mechanics of how a loan is structured—from custody to interest rates—can significantly impact a borrower's risk profile and experience.
This guide compares two prominent solutions: Coinbase, a major multi-asset exchange that recently integrated DeFi-based lending, and Lava, a purpose-built platform optimized exclusively for bitcoin-backed loans.
Feature Breakdown
Feature
Lava
Coinbase
Loan Structure
Fixed Rate (1 year)
Variable Rate (Fluctuates)
Cost (APR)
7-9% All-in (Fixed)
Variable (Pool-dependent)
Loan Limits
$1 to $1B+ (No max)
Up to $5M
Availability
Global
US Only (Excluding NY)
Collateral Security
Institutional-grade cold storage
Wrapped bitcoin (cbBTC) on Morpho smart contracts via Ethereum/Base
Liquidation Threshold
85% LTV
86% LTV
Liquidation Protection
Automated (at 70% LTV)
Manual
Customer Support
Live human support
Limited automated support
Primary Focus
Bitcoin-only borrowing
Multi-asset exchange
Overview of Features
Loan Structure and Interest Rates
Lava uses a fixed-rate model. When you take a loan, the rate is locked for one year. This protects you from interest rate spikes during market volatility. The structure is transparent: borrowers pay an annual interest rate between 5% and 7%, plus a one-time 2% capital charge. This predictability allows for precise financial planning, as you know exactly what your borrowing costs will be for the entire loan term.
Coinbase has moved much of its lending infrastructure to decentralized protocols like Morpho. These are variable-rate environments. If liquidity in the pool drops or borrowing demand spikes, your interest rate can increase without warning. While this model can occasionally offer lower rates during periods of high liquidity, it introduces uncertainty that makes long-term financial planning difficult. The variable nature means borrowers must constantly monitor their positions to avoid unexpected cost increases.This makes Coinbase potentially suitable for very short-term loans, but risky for longer-term borrowing.
Cost
The total cost of borrowing differs significantly between the two platforms. Lava offers the lowest fixed interest rates in the market (with a 7-9% all-in annual cost). Lava's fixed-rate approach means you pay a known percentage annually, with the 2% capital charge applied only to your maximum outstanding balance. There are no hidden fees, no origination charges, and no surprises. This transparency is particularly valuable for users who need to budget precisely or who are using borrowed funds for major purchases.
Coinbase's cost structure is more complex due to its variable-rate model. While the platform doesn't charge traditional origination fees, the interest rate itself fluctuates based on market conditions. During periods of tight liquidity or high borrowing demand, rates can climb substantially. Additionally, because Coinbase integrates with DeFi protocols, users may encounter blockchain transaction fees (gas fees) when initiating or closing positions, adding another layer of cost variability.
Access & Limits
Lava serves a global audience. There are no documentation requirements to start, and the process takes seconds. Users from any country can access the platform, deposit bitcoin as collateral, and receive a loan instantaneously. This frictionless approach removes traditional banking barriers such as credit checks, income verification, or residency requirements. The platform treats bitcoin as universal collateral, making it equally accessible to all users.
Coinbase has stricter limitations. Their lending product is currently available only in the US (excluding New York state), and borrowing is capped at $5M, making it unsuitable for high-net-worth individuals or institutions with larger liquidity needs.
Liquidation Risk
Lava significantly mitigates liquidation risk through three mechanisms. First, fixed interest rates mean users never face liquidation due to rising interest costs. Second, Lava offers automated liquidation protection—when a user's LTV hits 70%, the system automatically moves BTC from their available balance to their collateral balance to stabilize the loan. Third, users receive notifications when their loan-to-value ratio approaches dangerous levels, giving them time to add collateral or repay portions of their loan. The fixed-rate structuremeans that liquidation risk is purely a function of bitcoin's price movement, not interest rate changes.
Coinbase's liquidation risk is more complex due to the variable-rate model. Not only can bitcoin's price decline trigger liquidation, but rising interest rates can also increase the effective debt burden, pushing users closer to liquidation thresholds. The integration with DeFi protocols means liquidation processes may be automated through smart contracts, which execute immediately when thresholds are breached. While this automation ensures consistency, it can also result in faster liquidations during periods of extreme volatility, potentially giving users less time to respond.
Customer Support
Lava provides dedicated support focused exclusively on bitcoin lending. Because the platform serves a single purpose, support teams are specialized and can address issues quickly. Users report responsive communication and knowledgeable staff who understand the specific needs of bitcoin holders. The platform's simplicity also means fewer issues arise in the first place—there are no complex multi-asset portfolios to manage, no trading features to troubleshoot, and no confusion about which services apply to which assets.
Coinbase operates customer support across its entire ecosystem, which includes trading, staking, custody, and numerous other services. While the company has invested heavily in support infrastructure, the sheer breadth of services means support teams must handle a wide variety of issues. Some users have reported limited customer support, primarily relying on automated systems and help articles. For users managing significant collateral, the lack of responsive human support can be frustrating and risky during time-sensitive situations.
Focus
Lava's entire business model centers on one principle: Bitcoin is the world's best savings technology, and people should be able to use it as collateral without selling. This singular focus shapes every aspect of the platform. There are no distractions, no attempts to promote trading, and no pressure to diversify into other assets. The user interface is clean and purpose-built for one task: borrowing against bitcoin. This focus also means the company's incentives are aligned with long-term bitcoin holders—Lava succeeds when bitcoin succeeds, and when users can effectively use their bitcoin as productive collateral.
Coinbase is a broad financial services platform that happens to offer borrowing as one feature among many. The company supports thousands of cryptocurrencies, operates a major exchange, provides custody services, offers staking, and continues to expand into new areas. While this diversity provides options for users with varied needs, it also means borrowing is not the company's primary focus. Product development resources are spread across many initiatives, and the borrowing product must compete internally with other priorities. For users who want a multi-asset platform and plan to use various services, this breadth is valuable. For bitcoin-focused users, it can feel like unnecessary complexity.
Coinbase Strengths
For users who already hold assets on Coinbase and need a very short-term loan (a few days to weeks), the integration is seamless. The platform's DeFi integration may also appeal to users comfortable with on-chain mechanics and the Base L2 ecosystem.
Lava Strengths
Lava excels in cost certainty with fixed rates, global accessibility with no geographic restrictions or loan maximums, automated liquidation protection, and responsive human support.
Why Users Choose Lava
While Coinbase offers a quick solution for traders, Lava offers a better option for bitcoiners who want a high degree of certainty for a long-term loan. By offering fixed low rates, automated liquidation protection, global availability, and responsive customer support, Lava offers the best bitcoin-optimized lending experience.
You can get started on Lava in just a few minutes by creating an account here.
