Borrowing against Bitcoin on-chain is cheaper than borrowing from a company, and everyone in this market knows it. What almost nobody publishes is how much cheaper, measured consistently, over time.
We publish both indices every weekday, so the gap between them is a number rather than an impression. Across the 42 days of history we hold, custodial lending has cost between 4.48 and 6.22 percentage points more than on-chain lending, averaging 6.00 points.
That is the custody premium. This page is what it buys.
What six points costs in dollars
| Loan size | Premium at 6.00 points, per year |
|---|---|
| $50,000 | $3,000 |
| $100,000 | $6,000 |
| $250,000 | $15,000 |
| $1,000,000 | $60,000 |
Those are real numbers, and they are why the question deserves a serious answer rather than a reflex in either direction. The live figure, and both component indices, sit on the BoB Rate Index.
What the premium actually buys
Six points is not a markup for the same product. The custodial lender is selling five things a smart contract does not provide.
Real Bitcoin, not a wrapper. On-chain, your collateral is a token representing Bitcoin held elsewhere, usually cbBTC issued by Coinbase. A custodial lender holds actual Bitcoin, and the better ones place it with a qualified custodian such as Anchorage or BitGo Trust. You remove an entire layer of issuer risk.
Dollars, not stablecoins. A protocol lends you USDC. You still have to convert, which costs money and may be a taxable step. A custodial lender wires dollars.
A rate that does not move. On-chain rates reset continuously with pool utilisation and have no ceiling, as covered in what moves the DeFi borrow rate. A custodial rate is set when you borrow.
A cure window. This is the big one. Strike gives 72 hours, SALT 48, Arch and Unchained 24. On-chain there is no margin call, no notification and no grace period, as set out in what happens in a DeFi liquidation. A bot closes you out the moment you become eligible.
Someone to call. Worth nothing until the day it is worth everything.
The premium is not uniform, and that matters more than the average
The index-level gap compares an average against an average, which is the right way to track the market but the wrong way to make your own decision. Inside the custodial set the range is wide:
| Lender | Effective APR (incl. origination) | Max LTV | Lender page |
|---|---|---|---|
| APX Lending | 9.99% to 11.49% | 60.00% | Learn More |
| Arch (Deferred) | 9.49% to 10.99% | 60.00% | Learn More |
| Arch (Standard) | 8.99% to 10.49% | 60.00% | Learn More |
| CoinRabbit | 11.95% to 16.80% | 90.00% | Learn More |
| Figure | 9.76% to 12.35% | 75.00% | Learn More |
| Ledn | 9.99% to 11.49% | 50.00% | Learn More |
| Nexo | 15.90% | 50.00% | Learn More |
| SALT | 7.49% to 10.50% | 70.00% | Learn More |
| Strike | 7.75% to 10.47% | 50.00% | Learn More |
| Unchained | 14.18% | 50.00% | Learn More |
Lender facts on this page render live from our comparison database, last verified August 4, 2026. Figures refresh weekly; for the current set and your own loan size, see the comparison tool.
A borrower choosing the cheapest custodial lender is not paying six points over on-chain. They are paying considerably less, because the index average includes lenders charging well into double digits. The real comparison for a specific borrower is their best available custodial rate against their best available on-chain rate, and that gap can be half the headline number.
Equally, a borrower who ends up at the expensive end of the custodial set is paying far more than six points for the same protections that the cheapest custodial lender also provides. Which is an argument for shopping the custodial market properly rather than for abandoning it. Start at the comparison tool or best Bitcoin loans.
When the premium is worth paying
Pay it if you cannot watch the position. The cure window is the single most valuable component, and it is worthless to someone monitoring LTV hourly and priceless to someone who is not. If a 12% overnight Bitcoin move would find you asleep, six points is cheap insurance.
Pay it if you need dollars. Converting USDC to dollars has cost and friction, and possibly tax consequences. If the borrowed money is for a down payment or a tax bill, the stablecoin step is a real disadvantage.
Pay it if wrapper risk bothers you. Adding Coinbase custody risk on top of protocol risk is a genuine addition, not a technicality.
Do not pay it for protections you will not use. If you can defend a position quickly, hold a low LTV by default, and are comfortable receiving stablecoins, you are paying six points for a service you are not consuming.
And do not treat the premium as fixed. Both sides move. On-chain rates in particular can rise sharply when utilisation climbs, and a premium of six points today can compress quickly without any custodial lender changing a rate card.
Why we can measure this at all
Most sites cannot publish this number because they track one rail or the other. We snapshot both daily: the custodial index from lender rate cards with origination fees folded into an effective APR, and the on-chain index as a TVL-weighted average of variable USDC borrow rates across the Bitcoin-collateral protocols we track.
Both components are published alongside the blend on /rates, so the arithmetic is checkable rather than asserted, and the full history is downloadable from the data page. The methodology, including how the two are weighted into the headline index, is on the methodology page.
This is not financial advice
borrow/on/bitcoin is a comparison publisher, not a lender, broker, or financial advisor. We may receive compensation from some lenders featured on this page, which does not influence our indices or our default ordering. On-chain rates are variable and captured at a daily snapshot; custodial rates are the lenders' published terms and can change without notice. The premium figures here describe a measured historical range and are not a forecast. Borrowing against Bitcoin can result in the loss of your collateral under either model.