Strike, the bitcoin financial services firm run by CEO Jack Mallers, launched a bitcoin-backed loan product on July 7 that removes price-triggered liquidations for the life of the loan, according to Strike's own FAQ. The product, called "volatility-proof loans," strips out the 65% LTV warning, 70% margin call and 85% automatic partial liquidation that apply to Strike's standard bitcoin loan.
Collateral stays untouched no matter how far bitcoin's price falls, Strike says, as long as the borrower keeps making payments. Missing an interest or maturity payment still triggers a 10-day grace period, after which Strike can partially liquidate collateral to cover what's owed.
The protection comes at a cost. Volatility-proof loans cap initial LTV at 45%, versus 50% on Strike's standard product, cutting how much a borrower can draw against the same collateral, according to the FAQ. A borrower posting $100,000 in bitcoin can access $45,000, down from $50,000, per Bitcoin.com's reporting.
Terms shrink to six months from twelve, rates carry a roughly 2.95-percentage-point premium over the standard 7.49%-11.25% APR range, and borrowers cannot retrieve collateral mid-term or switch a loan into or out of the structure once it's originated, Strike's FAQ states.
