BitcoinFi & Borrowing

Bitcoin has always been a marvel of simplicity.

But simplicity is not the absence of complexity, it’s the mastery of it. And now, Bitcoin is evolving from its origins as a static store of value to become the foundation of a decentralized financial system—one that empowers individuals with liquidity and utility, without compromise.

For years, Bitcoiners have championed the philosophy of HODLing—holding their Bitcoin steadfastly, through volatility and uncertainty. But holding alone is not enough. True utility demands progress. Today’s Bitcoiners aspire to something more: to hold, yes, but also to unlock Bitcoin’s potential as a productive asset.

Why Bitcoin Borrowing Matters

Historically, attempts to unlock Bitcoin’s potential have fallen short. Centralized platforms promised the moon but delivered bankruptcy courts instead. The collapse of major players like BlockFi, Celsius, and Genesis in 2022 starkly illustrated the dangers of centralized counterparty risk. These platforms operated as "black boxes," offering little transparency into their operations while engaging in highly leveraged trading strategies and opaque yield generation methods. When these strategies failed, the resulting cascade of bankruptcies left many borrowers and lenders with substantial losses.

DeFi solutions on Ethereum, like wBTC, showed promise but introduced their own set of risks - just look at the recent BitGo-Justin Sun drama that sent MakerDAO running for the exits. When a single custodian controls 98% of tokenized Bitcoin on Ethereum, the systemic risk becomes substantial.

Bitcoin borrowing solves a core tension in the ecosystem. If you believe Bitcoin will appreciate significantly over time, selling it for temporary expenses is like selling Amazon stock in 1997 to buy a new computer. The ability to borrow against your Bitcoin while maintaining ownership creates a new kind of financial freedom - one where long-term believers can participate in today's economy without sacrificing their position in tomorrow's.

But it goes deeper than just personal finance. Traditional borrowing requires credit scores, banking relationships, and complex approval processes. Bitcoin borrowing strips this down to its essence: you have an asset, and you can use it to access capital, regardless of who you are or where you live. This becomes particularly powerful in regions with limited banking infrastructure or during periods of economic uncertainty.

Breaking the Bank Mindset

When you think about borrowing from your bank, what's really happening? You walk in—or more likely, open an app—and start the process. They check your credit score, evaluate your income, and decide if you’re “worthy” of accessing funds. Even if you qualify, the process is slow, bureaucratic, and full of friction. The entire time, it is the bank in control. They decide the terms, the timelines, and even whether you can access your funds in the first place.

Now, let's flip this model on its head with Bitcoin borrowing. Instead of asking permission from a bank to borrow their manufactured money, you're using your own asset - Bitcoin - as collateral. Bitcoin borrowing is built on autonomy. There are no gatekeepers, no credit checks, no need to prove your financial history.

The traditional banking model puts you at the mercy of institutions. They can freeze your accounts, change terms, or deny service based on factors entirely outside your control. With Bitcoin borrowing, you're effectively banking on yourself. Your Bitcoin remains your Bitcoin - you're just using its value as collateral while maintaining exposure to its upside potential.

Borrowing against Bitcoin moves us toward a notion of banking on yourself. Consider this practical example: If you need $50,000 for a business opportunity, the traditional path means filling out endless forms, waiting weeks for approval, and possibly being denied despite having significant assets. With Bitcoin borrowing, your Bitcoin holdings themselves are your "credit score." There's no lengthy approval process, no checking your employment history, and no arbitrary denials. You have the asset; therefore, you have access to capital.

Making Bitcoin Supernormal

Borrowing against Bitcoin becomes supernormal when it transitions from being a novel crypto experiment to an everyday financial tool that feels as natural as using a credit card or taking out a home equity line of credit. Just as we don't marvel at the ability to use our home equity to secure a loan, Bitcoin borrowing should feel equally intuitive and unremarkable. What makes this truly supernormal is how it preserves Bitcoin's core values - self-custody, transparency, and permissionlessness - while making them invisible to the end user. Instead of choosing between holding Bitcoin for the future or using it today, supernormal Bitcoin borrowing eliminates this false dichotomy.

The market opportunity for Bitcoin-based borrowing is immense, with traditional finance's global loan volume estimated at $5 trillion annually. Even modest penetration into this space reveals staggering potential. At just 1% market share, Bitcoin borrowing could represent $50 billion in loan volume, generating $3.5–4 billion in annual interest revenue at rates of prime plus 2-3%. Scaling to 5% penetration, loan volumes would reach $250 billion, yielding $17.5–20 billion in annual revenue.

This is further magnified when considering Bitcoin’s unique capacity as collateral. With a circulating supply valued at over $1.002 trillion in lending capacity, even a fraction of this deployed at a 50% loan-to-value ratio unlocks hundreds of billions in accessible capital.

Mezo is Providing the Venue

Mezo is transforming Bitcoin borrowing into a practical and engaging experience. Soon users will be able to borrow mUSD against their Bitcoin on matsnet Alpha, while being able to put their mUSD to use in innovative and fun ways (stay tuned!).