Lava

What happens if BTC drops.

The single most important question on a Bitcoin loan. With Lava, liquidation is algorithmic. Once your loan-to-value crosses the liquidation threshold below, the protocol can repay your debt and seize collateral without manual review.

Cure window: Protocol/app dependent; verify in-app.

What Lava publishes: Custody model unresolved (reporting indicates custodial cold storage as of Nov 2025; Lava's site still markets self-custody). Lava publishes up to 50% LTV, but exact liquidation parameters are shown in-app before borrowing rather than as a stable public threshold table. Treat the numeric threshold here as directional and verify in the app before acting.

The terms, translated.

With Lava, the “contract” is the smart-contract risk parameters and the loan terms. We've pulled the key terms from Lava's own data and translated them into plain English.

How Lava compares to its closest cousins.

The org, the founder, the governance.

Lava publishes 7.5% fixed interest below $100K balance and 6.5% fixed interest above $100K, plus a 2% annual capital charge on the highest outstanding balance. Public materials describe up to 50% LTV and an open line-of-credit structure. No KYC and no tracked state exclusions remain directional claims; real access depends on the app/front end and local rules. Regulatory status is unclear.

The 8-factor breakdown.

Custodial. Scores 4/10 (weak) on the custody axis. Non-custodial designs score highest because no third party can move collateral; custodial designs lose points proportional to operator discretion.

Policy: none. Scores 5/10 (moderate). "Strict" / "no-rehypothecation" policies score highest because collateral cannot be lent out; "permitted" policies lose points for exposure to counterparty failure on the re-pledged BTC.

Scores 2/10 (weak). Programmatic on-chain liquidation at a fixed LTV scores highest (predictable, no operator discretion); discretionary or off-chain liquidation processes lose points proportional to opacity and timing risk.

Regulatory status: undisclosed. Scores 3/10 (weak). US/EU-regulated lenders with explicit licensing score highest; offshore or DAO-governed entities lose points because there's less recourse if something goes wrong.

No public reserves reporting. Scores 4/10 (weak). Without auditable reserves disclosure, depositors have no independent confirmation that the assets exist and are unencumbered.

Scores 2/10 (weak). Lenders that publish operating reports, smart-contract code, and live rate/LTV parameters score highest; those that bury terms in PDFs or change rates without notification lose points.

3+ years operating since 2023. Scores 3/10 (weak). Older operations with surviving stress events (March 2020, Nov 2022, etc.) score highest; younger or untested operations lose points proportional to how many full cycles they've operated through.

Scores 2/10 (weak). Loan agreements with explicit liquidation order, segregated-account language, and clear borrower recourse score highest; ambiguous default terms lose points.

Questions readers actually ask about Lava.