Why are Unchained's interest rates higher than other lenders?

We don't rehypothecate (lend out) your bitcoin held as collateral.

Some lenders rehypothecate the bitcoin held as collateral for their loans, which allows them to offset their cost of capital, resulting in lower interest rates and origination fees for their loans. Unfortunately, the trade-off you make when opting to give your bitcoin to a rehypothecating lender to save a couple of percentage points is the risk of total loss of your bitcoin.

An example of rehypothecation 

Here are some example loan terms offered by a lender who engages in rehypothecation for a 12 month loan with a principal of $10,000:

LTV Interest Rate Origination Fee Total Cost of Loan

50%

9.75% 2% $1,161.64
35% 7.9% 2% $979.18

Lenders who rehypothecate client collateral can also have extreme restrictions on withdrawals. This can include limits on the amount withdrawn, frequency of withdrawals, or imposing lower LTV requirements for withdrawals after origination.

You can read more about rehypothecation in our Ultimate Guide to bitcoin-backed loans.

Unchained doesn't rehypothecate collateral

Unchained Capital's interest rates are higher than many competitors because we never rehypothecate the bitcoin held as collateral for your loan. The risk of doing so is the total loss of client collateral.

360 day loan with a principal of $10,000 at Unchained Capital (no rehypothecation):

LTV Interest Rate Origination Fee Total Cost of Loan
40% 14.00% 1.5% $1,530.82

While Unchained Capital loans do cost more, the risk of total collateral loss due to rehypothecation is wholly eliminated, ensuring that if the loan is repaid and the margin maintained, collateral is returned to the borrower. 

You can request a withdrawal from your loan 30 days after the last withdrawal or margin call and when the Collateral to Principal ratio rises to 300%. You can withdraw excess collateral so the CTP ratio is reduced to 250%, the same level as when the loan originated.