Here's the uncomfortable truth: most "Bitcoin lending" is just rehashed CeFi with extra steps. You send Bitcoin to a company, they promise you yield, and you hope they don't pull a Celsius or BlockFi. That's not a protocol. That's a bank account with better marketing.
Real Bitcoin lending protocols mean non-custodial architecture, transparent on-chain settlement, and mechanisms that don't rely on trusting a corporate entity with your keys. It means peer-to-peer lending, over-collateralized positions with liquidation logic you can verify, or cryptographic contracts that execute without intermediaries.
This standard eliminates virtually every household name in "Bitcoin lending." What's left? A mix of battle-tested P2P platforms that predate the DeFi boom, Layer-2 protocols building on Bitcoin's new capabilities, and experimental infrastructure using Bitcoin-native primitives like DLCs and statechains.
The criteria here: non-custodial or minimally custodial, verifiable on-chain activity, actual Bitcoin (not just wrapped tokens on other chains), and real users with real capital at risk. Some of these have been operating quietly for years. Others are pushing the technical boundaries of what Bitcoin can do. All of them represent a fundamentally different model than the centralized lending platforms that dominated the 2020-2022 cycle and then collapsed.
Here are the ten that actually matter:
1. Hodl Hodl - The P2P Pioneer That Never Went Down
What it is: A peer-to-peer lending platform where borrowers and lenders create contracts directly, with Bitcoin held in multi-signature escrow. No company custody, no pooled funds.
Why it matters: Hodl Hodl has been facilitating Bitcoin-collateralized loans since 2018, through multiple bear markets and the spectacular collapse of every major CeFi lender. They're still here because they never took custody. When users create a loan, both parties and Hodl Hodl hold keys to a 2-of-3 multisig. The platform can't access funds alone. During the 2022 CeFi meltdown, Hodl Hodl users kept lending because their Bitcoin was never at risk from platform insolvency.
Key features:
2-of-3 multisig escrow
Peer-negotiated loan terms
No KYC requirements
BTC-collateralized stablecoin loans
Global availability
The catch: You're matching with individual lenders, not accessing a liquidity pool. That means rates vary widely, and large loans can take time to fill. The UX is deliberately bare-bones. This is infrastructure for people who prioritize security over convenience. Also, dispute resolution still involves the platform as arbiter, so it's not fully trustless.
2. Lygos Finance - Bitcoin Layer 1 Lending Without the Custody Risk
What it is: A non-custodial lending platform using Discreet Log Contracts to enable Bitcoin-backed loans settled entirely on Bitcoin Layer 1.
Why it matters: Lygos acquired Atomic Finance (which built DLC infrastructure for Bitcoin options) and pivoted to lending in 2025. The platform uses DLCs (Bitcoin-native smart contracts) to create cryptographic loan agreements where neither Lygos nor the lender can unilaterally move your funds. The oracle attests to price data but can't control the Bitcoin. Borrowers and lenders pre-sign transactions for every possible outcome (repayment, liquidation, margin call), and settlement happens automatically on-chain. Pure Bitcoin Layer 1 lending with no bridges, no wrapped assets, and no custody risk.
Key features:
Discreet Log Contracts
2-of-2 multisig collateral
Bitcoin-native settlement
$25k to $100M loans
Institutional liquidity partners
The catch: Brand new infrastructure (launched August 2025) with limited track record. The technology is sound (Atomic Finance processed $140M in DLC volume), but Lygos as a lending product is unproven. Loans require institutional liquidity providers, so it's not as accessible as retail P2P platforms. You need substantial capital to participate.
3. Debifi - Institutional P2P with Military-Grade Multisig
What it is: A peer-to-peer Bitcoin lending platform for institutions, built by the Hodl Hodl team with a unique 3-of-4 multisignature escrow system.
Why it matters: Debifi takes the Hodl Hodl model and upgrades it for institutional scale. Instead of 2-of-3 multisig, they use 3-of-4. Borrower, lender, Debifi, and AnchorWatch (a trusted key agent) each hold one key. That means even if two keys are compromised, funds remain secure. The platform facilitates loans up to 5 years for amounts ranging from microloans to millions, with average APRs around 10%. Launched March 2024, currently in beta but fully operational.
Key features:
3-of-4 multisig escrow
Institutional liquidity aggregator
Up to 5-year terms
No rehypothecation guarantees
On-chain verification
The catch: Institutional-focused means retail borrowers might find the process more complex than consumer-grade platforms. While the 3-of-4 multisig is more secure than 2-of-3, you're still trusting Debifi and AnchorWatch to hold keys properly. Significantly better than full custody, but not truly trustless.
4. Sovryn - Ethereum-Style DeFi Secured by Bitcoin Miners
What it is: A comprehensive DeFi protocol on RSK (Rootstock) offering lending markets, margin trading, and AMM swaps. All secured by Bitcoin's mining hashrate.
Why it matters: Sovryn brings Ethereum-style lending pools to Bitcoin without leaving Bitcoin's security model. RSK is merge-mined with Bitcoin, meaning the same miners securing Bitcoin are securing Sovryn. The lending pools operate on smart contracts you can verify, with liquidation mechanisms that execute automatically. It's the closest thing Bitcoin has to Aave or Compound. Real lending markets with real liquidity, not P2P matching. The Zero protocol enables borrowing ZUSD stablecoins against Bitcoin collateral at 0% interest (you pay a one-time fee instead).
Key features:
Automated lending pools
Smart contract execution
Merge-mined Bitcoin security
Zero-interest stablecoin borrowing
Integrated margin trading
The catch: RSK's two-way peg uses a federated model. A group of trusted signatories controls the bridge between Bitcoin and RSK. That's a trust assumption, even if distributed. Also, RSK adoption has been slower than hoped, which means liquidity can be thin compared to Ethereum alternatives. The Zero protocol for 0% loans requires overcollateralization at 110%, meaning liquidation risk is high.
5. Alex Lab - Stacks Lending That Settles on Bitcoin
What it is: A DeFi protocol on Stacks offering lending pools, borrowing against Bitcoin collateral, and yield generation. All settled back to Bitcoin mainchain.
Why it matters: Alex is building the full DeFi stack on Stacks, which means every transaction ultimately settles on Bitcoin. The lending functionality lets you deposit Bitcoin (as sBTC) and earn yield, or borrow against your Bitcoin without selling. Automated market making applied to lending. No waiting for counterparties, just deposit and start earning or borrow instantly against your collateral. Stacks' Proof of Transfer consensus means Bitcoin miners are economically incentivized to secure the network.
Key features:
Automated lending pools
Bitcoin settlement guarantees
Collateralized borrowing options
Yield farming opportunities
Stacks DeFi integration
The catch: You're using sBTC (wrapped Bitcoin on Stacks), not native BTC. The wrapping mechanism requires trust in the peg operators, though Stacks is working toward a more decentralized model. Stacks is still proving itself as infrastructure. More decentralized than sidechains, but it's not Bitcoin Layer 1. The protocol launched lending markets in 2023, so limited long-term track record.
6. Liquidium - PSBT-Based Lending for Bitcoin NFTs
What it is: A fully on-chain lending protocol for Bitcoin Ordinals using PSBTs (Partially Signed Bitcoin Transactions) for trustless loan settlement.
Why it matters: Liquidium is pure Bitcoin infrastructure. Every loan is a PSBT that gets completed on-chain. Borrowers create offers with their Ordinals as collateral, lenders accept by completing the PSBT, and settlement happens automatically based on Bitcoin script logic. No external chains, no wrapped assets, no company holding anything. Peer-to-peer lending using nothing but Bitcoin's native transaction structure. When Ordinals created a new asset class on Bitcoin, Liquidium solved the liquidity problem. You can now borrow against rare inscriptions without selling them.
Key features:
PSBT-based execution
Pure Bitcoin settlement
Trustless collateral holding
Peer-to-peer marketplace
Zero external dependencies
The catch: The Ordinals lending market is tiny compared to traditional crypto lending. Loan terms are entirely peer-to-peer negotiated, so rates vary wildly and liquidity is inconsistent. The technical implementation is sound, but the market hasn't caught up yet. If the Ordinals hype cycle ends, so does the collateral value. This works only if Bitcoin NFTs maintain relevance.
7. Unchained Capital - Collaborative Custody for Serious Holders
What it is: A Bitcoin financial services company offering loans secured by 2-of-3 multisignature vaults where you hold two keys and Unchained holds one.
Why it matters: Unchained pioneered "collaborative custody." You control a majority of keys, so you can move your Bitcoin without permission, but Unchained can help if you lose a key. The lending model uses this same multisig structure. Bitcoin collateral sits in a 2-of-3 vault with you, Unchained, and a third-party key agent. Unchained can't move your Bitcoin alone, but they can collaborate on liquidations if needed. The company has originated over $1 billion in loans since 2017 and never rehypothecates collateral. US-only, licensed through Lead Bank in Missouri, built specifically for serious Bitcoin holders who want institutional-grade security without full custody.
Key features:
2-of-3 multisig escrow
No rehypothecation policy
Collaborative custody model
Institutional partnerships
Full regulatory compliance
The catch: You surrender control during the loan term. You can't unilaterally move Bitcoin without Unchained's cooperation. That's necessary for loan functionality, but it's not self-custody. Unchained only serves LLCs and corporations now (as of 2024), not individuals. Rates are higher than custodial competitors (16%+ APR) due to the conservative lending model. This is for businesses and high-net-worth individuals, not retail borrowers.
8. Lightning Pool - Liquidity Rental for the Lightning Network
What it is: A marketplace for buying and selling liquidity in Lightning Network channels, essentially enabling lending and borrowing of channel capacity.
Why it matters: Lightning Pool isn't traditional lending. It's liquidity rental. Lightning channels require Bitcoin to be locked up to provide payment capacity. Lightning Pool lets you rent that capacity without running your own node or locking your own Bitcoin. Particularly important for businesses and routing nodes that need inbound liquidity to receive payments. The mechanism is trustless. Participants use timelocked contracts that settle automatically. You're not lending Bitcoin directly. You're providing channel capacity and earning fees for routing Lightning payments.
Key features:
Lightning-native marketplace
Automated settlement
Timelocked contracts
Liquidity routing optimization
No custody requirements
The catch: Extremely niche. If you're not running Lightning infrastructure, you don't need this. The use case is narrow (channel liquidity providers and large Lightning users), and the learning curve is steep. Returns depend entirely on Lightning Network usage. If payment volume is low, so is demand for liquidity. This is infrastructure for infrastructure builders, not for everyday Bitcoin holders looking for yield.
9. Zest Protocol - Bitcoin Funding Real-World Loans
What it is: A lending protocol that uses Bitcoin as collateral to fund loans for emerging market businesses, built on Stacks with Bitcoin settlement.
Why it matters: Most Bitcoin lending is crypto-to-crypto. Zest is different. It's using Bitcoin to fund real-world loans to underbanked businesses in Latin America, Africa, and Southeast Asia. The protocol pools Bitcoin capital from lenders, deploys it to vetted borrowers through loan originators, and returns yield to lenders. Built on Stacks means transparent on-chain tracking of every loan, but actual capital flows to real businesses. Bitcoin becomes global capital infrastructure, not just crypto speculation. Lenders can earn yield on Bitcoin while supporting economic development in regions without access to traditional credit.
Key features:
Real-world loan deployment
Emerging market focus
Transparent on-chain accounting
Bitcoin settlement via Stacks
Institutional-grade reporting
The catch: Trust assumption with the loan originators who vet borrowers and deploy capital. You're not lending peer-to-peer. You're trusting Zest's credit assessment process and their partners' ability to collect repayments. These are illiquid positions. Loans have fixed terms (typically 6-12 months), and you can't exit early. Returns depend on real-world credit risk, harder to assess than crypto collateral. This is impact investing, not pure DeFi.
10. Ledn - The Custodial Platform That Actually Survived
What it is: A centralized Bitcoin lending platform offering both "Standard" and "Custodied" loan products with transparent proof-of-reserves and a track record dating to 2018.
Why it matters: Let's be clear: Ledn is custodial. But it belongs on this list because it survived 2022 when Celsius, BlockFi, Voyager, and Genesis all imploded. How? Conservative risk management, no rehypothecation in their "Custodied" product line, and transparent monthly reporting. Ledn originated $2.8 billion in loans and recently crossed $1 billion in 2025 alone. They dropped Ethereum support in May 2025 to go Bitcoin-only and moved entirely to custodied loans where collateral isn't lent out for yield. Not decentralized, but honest. They publish proof-of-reserves, disclose exactly how collateral is used, and maintained 100% solvency through the worst crypto crash in history.
Key features:
Proof-of-reserves attestations
Bitcoin-only focus (2025)
Custodied loan option
Transparent monthly reporting
120+ countries supported
The catch: This is centralized custody. You're trusting Ledn's solvency and management. If regulators shut them down or they make bad business decisions, your collateral is at risk despite their safeguards. Rates are competitive (starting around 14.9% APR) but not as low as some custodial competitors. This is for people who value Ledn's track record and transparency over true decentralization. The "least bad" custodial option, not a non-custodial solution.
What This List Reveals About Bitcoin Lending's Future
Notice the pattern? Half of these are pure peer-to-peer platforms (Hodl Hodl, Debifi, Liquidium) that never touch your funds. A quarter are Bitcoin Layer-2 protocols (Sovryn, Alex, Lightning Pool) building DeFi infrastructure on Bitcoin-adjacent chains. The rest are hybrid models that prioritize transparency even when they do take custody (Unchained, Ledn).
The P2P platforms survived 2022 because the model itself is resistant to collapse. When you never hold user funds, you can't lose them through mismanagement or rehypothecation. Hodl Hodl and its descendants prove that Bitcoin lending doesn't require trust. It just requires better architecture.
The Layer-2 protocols are more ambitious. They're trying to replicate Ethereum's lending pool model on Bitcoin. Automated markets, instant borrowing, yield farming. The trade-offs are more complexity and more assumptions (federated bridges on RSK, wrapped assets on Stacks). But the potential upside is real liquidity at scale, not just individual loan matching.
What's still missing? Deep liquidity and unified user experience. Bitcoin lending is fragmented across Lightning, RSK, Stacks, mainchain PSBTs, and DLCs. Each approach makes different trade-offs between decentralization, speed, and feature completeness. There's no "Aave of Bitcoin" yet because Bitcoin's architecture doesn't support Ethereum's smart contract patterns.
But fragmentation might be a feature, not a bug. These protocols optimize for different use cases. P2P for maximum decentralization and zero platform risk. DLCs for cryptographic enforcement without custodians. Sidechains for Ethereum-style UX with Bitcoin security. Lightning for instant settlement. Bitcoin doesn't need one dominant lending protocol. It needs specialized infrastructure for specialized needs.
The 2022 collapse taught the market a brutal lesson. Custodial models with opaque risk management will eventually blow up. The survivors either never took custody (Hodl Hodl, Debifi) or had conservative risk practices and transparent reporting (Ledn, Unchained). The new generation (Lygos, Liquidium) is being built explicitly to avoid custody risk through cryptographic enforcement.
This is exactly where Ethereum DeFi was in 2017, right before the explosion. The difference? Bitcoin has the liquidity, the trust, and the institutional backing Ethereum had to spend years building. The infrastructure is catching up fast. And when it does, it'll tap into the deepest pool of capital in crypto.
That's not speculation. It's just watching Bitcoin's financial layer get built the right way. Slowly, deliberately, with security and decentralization as non-negotiable requirements.
