What is a Bitcoin-Backed Loan?

A Bitcoin-backed loan allows you to borrow Australian Dollars by using your Bitcoin as collateral. Your Bitcoin remains yours throughout the loan term—you're simply using it as security, similar to how a traditional mortgage uses property as collateral. With Vield, only BTC can be used as collateral.

How It Works

Step 1: Deposit Collateral

You deposit Bitcoin (BTC) into a secure wallet provided by Vield. Each customer has a unique wallet address where your Bitcoin is held. Your Bitcoin deposit will be screened via Elliptic and Chainanalysis.

Step 2: Loan Application

Vield calculates your maximum loan amount based on:

  • The current market value of your Bitcoin (in AUD)
  • A maximum Loan-to-Value Ratio (LVR) of 50%

Step 3: Loan Assessment

You will be required to go through a serviceability test and a light credit assessment check. You are also required to complete the loan questionnaire and upload a bank statement.

Example:

If you deposit 1 BTC worth $50,000 AUD, you can borrow up to $25,000 AUD.

Step 4: Loan Approval

Your loan application will be submitted to the credit committee to be reviewed. Upon approval, the loan agreement will be generated for execution.

Step 5: Receive Funds

Once approved, your loan amount is transferred to your nominated Australian bank account within 2 business days.

Step 6: Manage Your Loan

You make regular interest payments according to your loan agreement. Your Bitcoin remains in your dedicated wallet throughout the loan term.

Step 7: Repay and Reclaim

When you repay your loan in full, your Bitcoin is transferred back to your personal wallet within 2 business days.

Key Loan Features

Collateral:

  • Accepted collateral: Bitcoin (BTC)
  • Held in your dedicated, secure wallet
  • Trackable on the blockchain at any time

Loan Terms:

  • Loan amounts: $2,000 - $250,000 (personal), $2,000 - $500,000 (commercial)
  • Fixed term: 12 months
  • Fixed interest rate: 13% APR
  • Interest compounded daily

Fees:

  • 2% origination fee (deducted from loan amount)
  • Early repayment fee (if applicable)
  • Late payment fees - $20 for personal loans & $100 for commercial loans

Custodial vs Non-Custodial Loans

Vield Loans are Custodial

When you take a loan with Vield, your Bitcoin is held in custody in a secure wallet. While the assets remain legally yours, they are held as security for the loan. You cannot access or transfer them until the loan is repaid.

Benefits:

  • Lower interest rates due to secure collateral
  • No risk of losing access to collateral through user error
  • Professional custody with institutional-grade security
  • Full blockchain transparency—you can track your assets

Non-Custodial Alternative

Some Bitcoin lenders offer non-custodial loans where you retain control of your Bitcoin. However, these typically come with:

  • Higher interest rates
  • Lower loan amounts relative to collateral
  • More complex smart contract requirements

Permitted Use of Funds

Personal Loans

Funds must be used for personal or domestic purposes, such as:

  • Home renovations
  • Debt consolidation
  • Major purchases
  • Education expenses
  • Medical expenses

Commercial Loans

Funds must be used for business purposes only.

Prohibited Uses

Loan funds cannot be used for:

  • Gambling or betting
  • Bail or bond payments
  • Payments to government agencies
  • Charitable donations
  • Any illegal activities

Benefits of Bitcoin-Backed Loans

Access Liquidity Without Selling:

Borrow against your Bitcoin without triggering a taxable capital gains event. Your Bitcoin remains yours and can appreciate in value during the loan term.

Fixed Terms and Rates:

Know exactly what you'll pay with a fixed 13% APR and a 12-month term. No surprises or variable rate changes.

Fast Approval:

Funds deposited within 2 business days of approval—much faster than traditional secured loans.

Risks to Consider

Market Volatility:

If your Bitcoin value drops significantly, your Loan-to-Value Ratio (LVR) may increase. At 75% LVR, you'll need to make additional repayments or add more collateral. At 85% LVR, you may face default proceedings.

Liquidation Risk:

If you fail to maintain your LVR or repay as agreed, Vield may liquidate your collateral to recover the outstanding loan amount.

Opportunity Cost:

While your Bitcoin is locked as collateral, you cannot use it for other purposes or move it to take advantage of market opportunities.

Need Help?

Email: support@vield.io

Phone: (02) 9157 9669