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The long-awaited release of Luquity V2 this month-Nadat an unfortunate bug The first implementation had sustained an important step forward for decentralized, censorship-resistant loans. However, it is limited to ETH, Steth and Reth as collateral.
To expand colland options, “friendly forks” are encouraged. Two promising new Bitcoin-supported Stablecoins launch with Liquities Tech: Alps Labs’ Bitcoin Dollar (BTD) and Asymmetry’s USDAF.
V2 is built around Liquities Battle Tested, Governance-Free Model and brings improved capital efficiency and user setting interest rates in addition to new collateral types. It is important that it extends the strict censorship minimization ethos of the original protocol to new block chains, including Ethereum and Bitcoin Layer-2s, through license agreements.
Bitcoin Lending has traditionally been dominated by storage platforms such as Blockfi, Celsius and LEDN, where users transfer their BTC in exchange for dollar – Liquidity – often at the expense of transparency, flexibility or sometimes good, solvency. The newest option, presented in Las Vegas on Bitcoin2025, is from Bitcoin Payments Company Strike, which offers Bitcoin-supported loans against interest rates between 9-13%-typical for guards.
In comparison with centralized services, the Defi alternatives offer much better conditions.
The range of asymmetry, which is live on the Ethereum Minnet, accepts TBTC, WBTC and CBBTC at Max LTVs above 80%, with loan interest rate between 4.2% and 7.1% Apr.
Alpen’s BTD, although not yet live on Mavet, wants to do the same with the help of Native BTC computer (eventually via BitVM Bridges) in a Zero-Governance ZK Rollup, according to CEO Simanta Gautam.
“We are building a Bitcoin-Native, censorship-resistant stablecoin-not another packed token or federal bridge,” Gautam told Blockworks.
The BTD will be unchangeable from the first day and launches without governance or admin tests -just like Liquity itself. That is unusual under Lquity V2 Forks, who usually promise tokens to Liquities’s own Bold Stablecoin Liquidity and Stability Providers.
Even non-liquity options such as Mezo, who launched Mainnet this week, offer Bitcoin-supported loans on 1% fixed interest-rate and, although users give up custody and flexibility to take advantage. The Musd Stablecoin is only useful through integrated partners in the Mezo market.
The clear benefits of the decentralized model are capital efficiency, lower interest rates and possibly the elimination of the storage risk. For advanced users who want to assign new capital to Bitcoin, there is little reason to use a custodian.
But there is one big reservation: tax treatment.
In most areas of law, converting native BTC into a non-Native version (such as LBTC or TBTC) is treated as a taxable removal. So although borrowing itself is not taxable, the act of moving BTC to a Defi protocol can cause an event in capital gain. That is where liabilities such as strike and Xapo still have a lead to allow BTC to remain untouched while serving as collateral, they retain a favorable tax treatment for long-term holders.
There is a third category that can offer a middle ground: the indigenous Bitcoin setting of Babylon, which locks BTC for proceeds but does not create a derivative or needs assets exchange. It is still early, but that model can offer both yield and tax efficiency- without self-coasts. On the other hand, it is not a stablecoin that you can spend elsewhere, and the BTC income can be subjected to tax like any other.