How to Lend or Borrow Bitcoin Peer to Peer With Debifi

Most Bitcoiners face an uncomfortable choice when they need cash: sell their BTC (triggering taxes and losing future upside) or take out a loan from a centralized platform that controls their collateral. The collapse of lenders like Celsius and BlockFi in 2022 made the risks of that second option painfully clear.

Debifi, a Swiss company founded in March 2024, offers a third path: peer-to-peer Bitcoin-backed loans where your collateral sits in a multisig escrow that no single party controls. The platform exited beta in June 2025 with over $20 million in loans originated, and Zone21.com ranks it as the second-safest Bitcoin lending platform globally.

Here's how it actually works, whether you want to borrow against your Bitcoin or earn yield by lending.

How the Multisig Escrow Works

Debifi's core innovation is a 3-of-4 multisig arrangement. Four parties hold keys: you (the borrower), the lender, Debifi itself, and AnchorWatch (a third-party custodian). Any transaction moving the Bitcoin collateral requires three of those four signatures.

This means Debifi can't run off with your coins. Neither can the lender, or AnchorWatch acting alone. If you repay your loan, you and the lender sign to release your collateral. If there's a dispute, the other keyholders can arbitrate. The Bitcoin stays in a unique escrow address visible on-chain throughout the loan term.

For loans exceeding $300,000, Debifi requires hardware wallet support (they specifically mention Coldcard Q with NFC capability) to sign transactions.

Borrowing: Step by Step

To borrow on Debifi, you'll need to download their mobile app (available for iOS and Android) and create an account with email and two-factor authentication.

The process works like this:

1. Browse available loan offers at debifi.com/offers. Lenders post terms including APR (typically 9-20%), loan-to-value ratio (30-70%), and duration (now up to 24 months as of September 2025).

1. Accept an offer that fits your needs. You'll need to provide a public key through the app or via NFC from a hardware wallet.

1. Deposit your Bitcoin collateral plus a 1-2% origination fee to the multisig escrow address within 12 hours.

1. Receive your funds. Debifi supports stablecoins (USDT/USDC), fiat currencies (USD, EUR, CHF, GBP, and others), or a prepaid card option.

1. When the loan term ends, repay principal plus interest directly to the lender. Once confirmed, you and the lender sign to release your collateral.

Minimum loan amounts are $500 for the prepaid card option and $5,000 for other disbursement methods. There's no stated maximum.

What Happens if Bitcoin's Price Drops

This is where borrowers need clear eyes. Bitcoin volatility creates real liquidation risk.

Debifi uses tiered margin calls at 75%, 80%, and 85% loan-to-value ratios. If your collateral value drops to those thresholds relative to your loan amount, you'll need to add more Bitcoin or repay part of the loan.

At 90% LTV, automatic liquidation kicks in. The platform sells enough of your collateral to cover the loan, and you'll pay a 5% liquidation fee. Depending on when you took the loan and how far Bitcoin falls, you could lose a significant portion of your collateral.

This isn't unique to Debifi; it's inherent to any over-collateralized crypto loan. But the non-custodial structure means you at least know where your Bitcoin is throughout the process.

Lending: How Institutions Participate

Debifi's lending side is currently institutional. Individual retail lenders can't participate directly; you'll need to complete a KYB (Know Your Business) verification process.

Institutional lenders submit an application through the "Become lender" form on debifi.com, sign a lender agreement, then create offers with their preferred terms. They can make offers public (visible to all borrowers) or private (for specific clients).

Lenders set their own APR starting from 9%, choose acceptable LTV ratios, and define loan durations. Interest payments go directly to lenders; Debifi's revenue comes solely from the origination fee charged to borrowers.

The platform claims over 30 institutions were lending through it as of June 2025, with partnerships including The Bitcoin Adviser and Finpeers. A more significant institutional product called MultiSYG, developed with Sygnum Bank, is expected to launch in the first half of 2026 with a 5-party multisig structure.

The Tradeoffs

For borrowers, the main advantages are clear: you maintain partial control of your collateral, avoid selling (and thus capital gains taxes in most jurisdictions), and don't trust a centralized platform to stay solvent.

The downsides? Rates of 9-20% APR are not cheap, especially if Bitcoin enters an extended bear market and you face margin calls. The origination fee adds to costs. And institutional lenders typically require borrower KYC, so this isn't an anonymous option.

For lenders, the appeal is earning yield on capital with Bitcoin as collateral, which historically holds value better than most assets. The multisig structure protects against platform failure. But there's opportunity cost: if Bitcoin rises significantly during the loan term, you'd have been better off just holding BTC rather than earning 9-15% in fiat terms.

Should You Use It?

Debifi solves a real problem for people who hold meaningful amounts of Bitcoin and need liquidity without selling. The non-custodial model genuinely reduces counterparty risk compared to platforms that rehypothecate your collateral.

But it's not magic. You're taking on leverage with a volatile asset as collateral. If you borrow at 50% LTV and Bitcoin drops 45%, you're in liquidation territory. The platform's safety ranking and multisig structure protect you from fraud and platform insolvency; they don't protect you from market risk.

For Bitcoiners who understand those tradeoffs and have a clear use case for the liquidity, Debifi represents one of the more thoughtfully designed options available. The fact that it's survived a full year of operation and grown to $20 million in originations suggests the model works. Whether it works for your specific situation depends entirely on your risk tolerance and why you need the cash in the first place.