A user could deposit $1,000 worth of BTC into a lending protocol as collateral and then borrow USDC against it. They can then use the borrowed USDC in various ways:

• Reinvest in BTC: Convert the borrowed USDC back into BTC and lend it out again to increase yield exposure (this would be termed “leveraged yield farming”).
• Pay Off Expenses: Use the borrowed funds for personal or business expenses while still holding their BTC.
• Deploy in DeFi Strategies: Provide liquidity, stake, or use the borrowed USDC to earn additional yield elsewhere.

At the same time, the borrower still owns their original BTC, meaning that if BTC appreciates in value, they benefit from the price increase while using the borrowed funds.

However, if BTC’s price drops significantly, they may risk liquidation.

To learn more about Lending & Borrowing, visit:

• Lending & Borrowing Overview
• Interest Rates
• Liquidations
• Flash Loans
• Lending & Borrowing Key Terms
• Lending & Borrowing Key Considerations
• Lending & Borrowing Projects