Strike is launching a unique financial instrument on the market — bitcoin-backed loans that completely eliminate the risk of margin calls and forced liquidation during a sharp drop in the asset's price. This is a fundamentally new approach to collateralized lending in the crypto space, where bitcoin's volatility has traditionally been the main stumbling block.
Strike CEO Jack Mallers explained that protection against liquidation is achieved through additional hedging, which is financed via a higher interest rate. Essentially, the borrower pays a premium for the assurance that their collateral will not be sold under any market fluctuations. This is especially relevant for long-term holders who do not want to part with their bitcoin even in a bear market trend.
The lending terms are as follows: the annual interest rate is 14.2%, and the loan term is limited to six months. However, it is worth emphasizing that late payments can still lead to liquidation of the collateral — the protection only applies to market fluctuations, not to breaches of the borrower's obligations.
From my perspective, this product is an important step toward the institutionalization of crypto lending. By eliminating the main fear of bitcoin holders — losing the asset due to temporary market declines — Strike creates a bridge between traditional finance and decentralized assets. However, the high rate of 14.2% may deter retail users, making the product more of a niche solution for wealthy clients seeking liquidity without selling their bitcoin.