The lending platform introduces a bitcoin-collateralized credit line with competitive rates.
On November 3, Lava, a global platform specializing in bitcoin-backed loans, announced a $200 million funding round and the launch of a new product: the Bitcoin Line of Credit (BLOC).
According to the press release shared with Bitcoin Magazine, the $200 million raise combines venture capital and debt financing, bringing on two new investors: Anthony Pompliano, investor and entrepreneur, and Eric Jackson, public markets activist investor and founder of EMJ Capital.
“I’m thrilled to be joining Lava as an investor,” says Jackson. “Shehzan and his team are world-class, and they’ve been incredibly innovative on the product side. Not only is their revolving line of credit a first in the industry, but they’ve also managed to secure the lowest borrowing rates for their users”.
Thanks to the new capital injection, Lava offers competitive interest rates “starting at 5%” for one-year terms. The rate is updated annually, and users can keep their credit line open to refinance at the new rate.
Unlike traditional loans, the credit line functions as a revolving account: users can borrow, repay, and borrow again at any time, with interest applied only to the amount actually used, not to the total credit capacity.
“We believe that this is the best possible borrowing experience for bitcoin holders. You can get dollars instantly, you don’t have to worry about monthly payments or loan durations, and you get access to the lowest fixed interest rates,” said Ceo Shehzan Maredia, adding, “This has been their most requested product and will be Lava’s core focus moving forward.”
In addition to the fixed 5% rate, the credit line includes a capital fee equal to 2% of the highest balance reached during the year. For example, if a user’s loan balance reaches $5,000 at any point, the annual fee will be $100. This brings the total cost of a bitcoin-backed loan to around 7% per year.
Loans can reach up to 50% of the total USD value of a user’s bitcoin balance in the Lava app. Most USD lending and payment products are available without providing personal information. Lava also includes a “liquidation protection” feature, which can draw from the deposited bitcoin balance and add it as collateral to protect users from liquidation in case of BTC price volatility.
