Bitcoin's Liquidity Protocol

The safest way to borrow against your Bitcoin

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Incubated By

Built with

$2,421,989,094
Total Loans Issued
$1,932,293,017
Total Value Locked
$65,333,651
Borrowed

Using sBTC to connect Bitcoin to DeFi

sBTC is a decentralized Bitcoin bridge developed by the Stacks community. It allows you to use Bitcoin in DeFi while keeping your BTC securely stored on the Bitcoin blockchain. Using Stacks' Proof-of-Transfer (PoX) consensus, sBTC ensures a direct and secure connection to Bitcoin, with bridged funds protected by Stacks validators through a threshold signature system.

Why Granite?

No Rehypothecation

Your collateral is isolated and never lent to others, eliminating DeFi’s “pooled-risk” problem.

Soft Liquidations

Minimize loss with gradual liquidations that are limited to only the amount required to restore solvency, and no more.

Offline Position Tracking

Push notifications to track your position, so you don’t need to stay glued to prices.

How it Works

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Deposit BTC as collateral

Your collateral is never lent to other users

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Borrow stablecoins

Generate liquidity by unlocking the value of your BTC

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Repay on your terms

No repayment required as long as you maintain a healthy LTV

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Deposit stablecoins

Contribute capital to a liquidity pool

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Borrowers take out loans from the liquidity pool

Borrowers’ debt is secured by their Bitcoin collateral

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Earn yield

Returns come from interest paid by borrowers

Frequently Asked Questions

Everything you need to know about the protocol.

Granite Protocol is an autonomous Bitcoin Liquidity Protocol on the Stacks blockchain. The protocol allows borrowers to take stablecoin loans using Bitcoin as collateral, without exposure to counterparty or rehypothecation risk. Liquidity providers can earn yield on stablecoins by providing liquidity to the pool, which is then lent to borrowers.

Loans in Granite are best thought of as lines of credit, without set terms or repayment schedules. As long as the borrower maintains an adequate loan-to-value ratio (LTV), keeping their account in good health, they are not subject to liquidation. If a borrower’s LTV falls too low, a portion of their capital will be liquidated to bring their account back to solvency.

Rehypothecation is the lending of users’ collateral assets to earn yield - it’s how the vast majority DeFi and CeFi liquidity protocols generate returns. But it also creates a “pooled-risk” problem where all users are exposed to the riskiest asset in a protocol’s collateral pool, resulting in outcomes where users cannot withdraw collateral even after a loan is repaid. Protocols attempt to manage this risk by carefully selecting collateral assets and choosing good oracle partners, but it is always present.

Granite never rehypothecates collateral: your BTC stays in the protocol and is never lent out. This eliminates “pooled risk”, making Granite far safer than most liquidity protocols. As a result, though, collateral does not earn yield - a small price to pay for peace of mind.

sBTC is a non-custodial, programmable 1:1 Bitcoin-backed asset that enables decentralized movement of BTC in/out of Bitcoin layers, issued on the Stacks Bitcoin L2 and built by the Stacks developer community. sBTC bridges Bitcoin into DeFi without swapping or exposure to centralized custodians, and is secured and managed by Stacks validators via a threshold signature script on the Bitcoin blockchain, minimizing counterparty risk. sBTC leverages the unique proof-of-transfer (PoX) consensus mechanism of Stacks, a Layer 2 blockchain that connects directly to Bitcoin for enhanced security.

The health of a borrower’s position in the protocol is determined by the loan-to-value ratio: the value of borrowed capital / collateral value. Healthy accounts have lower LTVs, meaning there is enough collateral value to cover the debt + an adequate safety buffer. Unhealthy accounts have smaller safety buffers, and will be subject to liquidation if collateral values fluctuate and the collateral value no longer covers the debt position.

In a liquidation, liquidators repay a portion of the borrower’s debt in exchange for an equal-value portion of their collateral (plus a small reward paid from their collateral). Liquidations allow the protocol to maintain solvency where all debts are adequately collateralized.

Granite Protocol is unique in that liquidations are only permitted back to the point of borrower account solvency - liquidators are not allowed to liquidate more than is required to regain solvency. This is different than most DeFi lending protocols, where liquidators can take 50-100% of a borrower’s collateral if their account becomes insolvent (which is very detrimental to borrowers). Granite’s approach of limiting liquidations to the minimum amount of capital required to return an account to solvency reduces the impact of liquidations for the borrower while also maintaining protocol solvency.

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Visit our full Github to see how Granite is built.