Borrowing against Bitcoin has become a standard way to access liquidity without selling BTC. The trade-off is usually cost: once funds are borrowed, interest begins accruing immediately, regardless of how much of the loan is actually used.
Clapp.finance approaches this differently. Instead of issuing fixed loans, it offers a Bitcoin-backed credit line where interest is tied to usage and risk. Under specific conditions, this allows borrowers to maintain access to liquidity without paying interest on unused funds. The distinction between a credit line and a traditional loan is central to how this works.
Clapp Credit Line vs. Fixed Loan
Feature
Clapp Credit Line
Fixed Crypto Loan
Loan structure
Revolving credit limit
Fixed loan amount
Interest on unused funds
0%*
Interest applies immediately
When interest starts
Only after funds are borrowed
From loan start
Repayment schedule
Flexible, repay anytime
Fixed term and schedule
Credit availability after repayment
Restored automatically
Requires new loan
LTV management
Dynamic, user-controlled
Fixed at origination
Cost predictability
High at low LTV
Lower, interest accrues regardless of usage
Suitability
Intermittent liquidity needs
Long-term borrowing
*0% is applied when LTV is below 20%
When BTC is deposited into Clapp, it serves as collateral for a borrowing limit calculated from its market value. That limit represents available liquidity, not an obligation to borrow. Funds can be drawn at any time, in full or in part, and repaid without a fixed schedule. As repayments are made, the available credit is restored automatically.
This structure determines how interest is applied.
Where Zero Interest Applies
With Clapp, simply having access to a credit line does not generate cost. Unused credit carries a 0% interest rate. Interest begins accruing only once funds are borrowed, and only on the amount in use. The rate depends on the loan-to-value ratio, which measures borrowed funds against the value of the Bitcoin collateral.
When LTV remains below 20%, borrowing costs stay low and the unused portion of the credit line remains fully interest-free. In effect, the borrower is not paying for liquidity that is sitting idle.
For example:
Assume a user deposits BTC worth $60,000.
At first, the credit line remains unused. There is no interest and no obligation.
Later, the user borrows $9,000 in stablecoins. LTV is 15%. Interest applies only to the $9,000. The remaining available credit stays unused and carries 0% interest.
When the borrowed amount is repaid, interest stops immediately and full access to the credit line is restored.
Why Bitcoin Collateral Changes the Risk Profile
Bitcoin’s price volatility makes LTV management critical.
Small market moves can change borrowing conditions. Keeping LTV conservative provides:
Buffer against price swings
Lower liquidation risk
More predictable borrowing costs
Clapp’s structure reflects this dynamic. It does not reward maximum leverage. Instead, it favors restrained use, where liquidity is available but borrowing remains limited. The zero-interest condition on unused funds works only when paired with active LTV discipline.
Repayment Without Constraints
Repayment flexibility reinforces this approach. There are no fixed maturities or repayment deadlines. Borrowers can repay partially or fully at any time, without penalties. Interest applies only while funds are in use, and unused credit never accrues cost.
This makes the credit line suitable for intermittent liquidity needs rather than long-term borrowing. It fits users who hold Bitcoin as a long-term asset, want access to stablecoins when needed, and prefer predictable costs over aggressive leverage.
Common Misinterpretation of Zero Interest
The most common misunderstanding around “zero-interest” crypto loans is assuming that borrowing itself is free. With Clapp, that is not the case. Zero interest applies only to unused credit, not to funds already borrowed. Borrowed amounts accrue interest based on LTV, reflecting actual risk.
That distinction is what keeps the model transparent. In practice, Clapp’s Bitcoin-backed credit line functions less as a loan product and more as a liquidity tool. It allows BTC holders to keep capital accessible without paying for it upfront, while maintaining clear boundaries around cost and risk once borrowing begins.
Used conservatively, it offers a controlled way to borrow against Bitcoin without unnecessary interest exposure.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
