🤝Borrowing & Liquidations

Permissioned borrowing, collateral rules, and liquidation mechanics

BitVault uses a permissioned borrowing model. It is designed for institutional-grade stability. Borrowed stablecoins are used to mint bvUSD.

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How borrowing works

BitVault’s borrowing flow creates bvUSD supply. It also creates an optional structured yield leg via sbvUSD.

The complete flow

Step 1 — Deposit collateral

Whitelisted institutions deposit approved assets. Collateral is held in qualified institutional custody.

Step 2 — Borrow stablecoins

Borrow USDC or USDT against collateral.

• BTC variants: up to 73% LTV (137% collateral ratio)

• Tokenized equities: 50–65% LTV (154–200% collateral ratio)

Step 3 — Mint bvUSD

Mint bvUSD 1:1 using the borrowed USDC/USDT. All positions are overcollateralized.

Step 4 — Stake for sbvUSD (optional)

Stake bvUSD into sbvUSD. BV Labs Ltd. deploys capital into delta-neutral strategies.

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Accepted collateral

Bitcoin & derivatives

Asset type	LTV	Collateral ratio
BTC	73%	137%
WBTC	73%	137%
tBTC	73%	137%
bgBTC	73%	137%
BTC LSTs	73%	137%

Tokenized equities

Asset type	LTV	Collateral ratio
Whitelisted securities	65%	154%

Tokenized equities must:

• Be issued by approved, regulated tokenization platforms

• Represent fractional ownership in publicly traded securities

• Meet liquidity and market cap requirements

• Pass governance whitelist voting

• Respect concentration limits (max 40% of protocol TVL)

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Liquidations

Liquidations prevent undercollateralization. They protect bvUSD backing.

Liquidation thresholds

Collateral type	Warning threshold	Liquidation trigger
BTC / wrapped / exotic / LSTs	78% LTV	85% LTV
Tokenized equities	70% LTV	80% LTV

Tokenized equities use lower triggers. This accounts for market hours and settlement constraints.

Liquidation process

Automated monitoring

• Real-time collateral ratio tracking

• Oracle price feed checks

• Alerts and attestation verification

Margin call (warning phase)

Borrowers are notified near the warning threshold. They can add collateral or repay debt. A grace period applies.

Liquidation execution

• Partner liquidation (primary)

  • Approved liquidators repay debt in exchange for collateral at a discount.

• Just-in-time liquidation (fallback)

  • Additional liquidators can provide bvUSD liquidity.

  • Liquidators receive 105% of bvUSD value in collateral.

Tokenized equity liquidation considerations

• Settlement windows (T+1 / T+2)

• Market hours awareness

• Coordinated execution via regulated venues

• Corporate action handling (splits, dividends, mergers)

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Custody & compliance

Collateral is held via qualified institutional custodians:

• Segregated accounts

• No rehypothecation

• Daily reporting / attestations

• Insurance coverage where available

KYC/AML requirements

Institutional borrowers complete:

• Identity verification (incl. beneficial owners ≥10%)

• Sanctions screening with ongoing monitoring

• Source-of-funds documentation for large positions

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The structured product advantage

Traditional DeFi lending stops at “borrow stables”. BitVault adds an optional structured yield leg.

Deposit collateral → Borrow stables → Mint bvUSD → Stake sbvUSD

Benefits:

• Unlock USD liquidity without selling BTC or equities

• Earn yield via sbvUSD (target 12% APY)

• Maintain economic exposure through delta-neutral design

• Use institutional custody and compliance rails

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Risk disclosure

Borrowing carries liquidation risk. Collateral values can decline fast. Custody and counterparty risks apply. Smart contract and regulatory risks apply. Target yields are not guaranteed. BitVault is not a bank.