Borrowers who move from a custodial Bitcoin lender to an on-chain protocol usually carry one assumption across that does not survive the trip: that something will warn them first.
It will not. A DeFi liquidation has no margin call, no cure window, and nobody to phone. The threshold is a number in a smart contract, and when your position crosses it the contract does not notify you, it simply becomes profitable for a stranger to close you out. This page is the sequence, the buffer each protocol actually gives you, and the honest comparison against what a custodial lender does instead.
The sequence, step by step
1. A price oracle updates. The protocol does not read Bitcoin's price from an exchange you use. It reads from an oracle, usually an aggregate feed. Your position's health is recalculated against that number, not against the price on your screen.
2. Your loan-to-value crosses the liquidation threshold. This can happen because Bitcoin fell, or because interest accrued on your debt while you did nothing. Both raise LTV. There is no state in between "fine" and "eligible".
3. The position becomes liquidatable, immediately. No notice is sent. No deadline starts. There is no cure period because there is no counterparty with the discretion to grant one.
4. A bot closes it. Liquidators monitor eligible positions continuously and compete to act first, because the liquidation discount is free money to whoever wins. This typically resolves within a block or two of the oracle update.
5. You keep the borrowed stablecoins and lose collateral at a discount. The liquidator repays part of your debt and takes collateral worth more than they repaid. That spread, usually 5 to 10 percent, is the penalty. You do not choose the liquidator, the timing, or the execution price.
The buffer each protocol gives you
The number that matters is not the maximum LTV. It is the distance between the maximum you are allowed to borrow and the point at which you can be closed out.
Read the amber bands carefully. On Fluid you can borrow to 85% and are liquidated at 90%, a five point gap. A borrower who draws the maximum has given themselves a buffer that a routine Bitcoin move erases in an afternoon. Granite on Stacks is at the other extreme, 50% to 65%, which is a fifteen point cushion and closer to how a custodial lender is structured.
This is why "max LTV" is a misleading headline for a DeFi protocol. A high ceiling is not generosity, it is a shorter fuse.
How this differs from a CeFi margin call
Custodial lenders build in the thing DeFi cannot: a human-controlled pause.
| On-chain protocol | Custodial lender | |
|---|---|---|
| Warning before liquidation | None | Margin call notification |
| Time to cure | None | Strike 72h, SALT 48h, Arch 24h, Unchained 24h |
| Who liquidates | Any bot | The lender, on its own schedule |
| Partial or full | Usually partial, up to a close factor | Partial at most lenders in our set |
| Someone to call | No | Yes |
The custodial cure window is not a formality. In a sharp drawdown it is the difference between adding collateral and watching a bot take it. Our margin call guide covers what to do inside that window, and it has no on-chain equivalent.
Custodial lenders vary on this more than people expect:
Margin call & liquidation
Maximum origination LTV 60 percent. Specific margin-call and liquidation LTV thresholds are not publicly posted.
Cure window
Not publicly posted. Ask the lender before you borrow.
Margin call & liquidation
Same liquidation mechanics as the Monthly Payment product, 24h cure window from margin call trigger.
Cure window
24 hours from margin call trigger to add collateral, repay principal, or request partial liquidation
Margin call & liquidation
Specific threshold not publicly posted
Cure window
24 hours from margin call trigger to add collateral, repay principal, or request partial liquidation
Margin call & liquidation
Liquidation LTV: 80-95% (borrower-chosen at origination; varies by collateral asset). Margin call LTV not separately specified publicly.
Cure window
Not publicly posted. Three-tier alert system (Safe Zone / Warning Zone / Margin Call Zone) with email/SMS notifications. Auto-top-up feature available.
Margin call & liquidation
Maximum initial LTV 75%. Specific margin-call and liquidation LTV thresholds for the Figure Markets product are not separately published; a 2% processing fee applies to any liquidated collateral.
Cure window
Not publicly posted. Ask the lender before you borrow.
Margin call & liquidation
A 70% LTV alert is a notification/reminder, not a formal margin call; liquidation triggers at 80% LTV. Initial LTV at origination: 50%. Thresholds visible at ledn.io/bitcoin-loan-calculator.
Cure window
No formal contractual cure window. Ledn states "typically there are no time windows to meet collateral calls." Auto-top-up feature provides alerts at 70% LTV but is not a contractual guarantee.
Margin call & liquidation
Not publicly posted. Ask the lender before you borrow.
Cure window
Not publicly posted. Ask the lender before you borrow.
Margin call & liquidation
Four stages: (1) warning at 75% LTV; (2) formal margin call at 83.33% LTV with a 48-hour cure; (3) final notice at 88% LTV; (4) Stabilization at 90.91% LTV. Stabilization is not a traditional liquidation: rather than selling collateral to repay the loan, Salt converts the bitcoin collateral to USDC to lock in its value and leaves the loan in place. The conversion carries a 3% fee, and converting the USDC back to bitcoin later carries a 2% fee.
Cure window
48 hours to cure once formal margin call issued at 83.33% LTV. Must restore LTV to 70% or below.
Margin call & liquidation
Warning at 65% LTV. Margin call at 70% LTV, 72h cure to restore to 65% or below. Auto-partial-liquidation at 85% LTV (only enough BTC sold to restore to 65%). Note: 'volatility-proof' non-liquidating product is private client desk only.
Cure window
72 hours from margin call trigger (extended from 24h in February 2026). Must restore LTV to 65% or below. Auto-cancels if BTC price recovers within window.
Margin call & liquidation
CTP < 150% (LTV > 66.7%) triggers 24h margin call. CTP ≤ 120% (LTV ≥ 83.3%) triggers immediate hard liquidation with no additional cure. Max origination LTV is 40% (CTP 250%). BUSINESS ENTITIES ONLY, no sole proprietors.
Cure window
24 hours to cure CTP violation (for contracts post Feb 19, 2025). Options: add BTC collateral or repay principal to restore CTP above 150%. After cure window, foreclosure notice issued; liquidation is immediate and irreversible.
Two ways to be liquidated without a price crash
Interest drift. Your debt grows continuously. A position opened at a comfortable 60% LTV in a flat market climbs toward the threshold on its own, and the rate doing the climbing is variable and uncapped. See what moves the DeFi borrow rate for why it can rise sharply without warning.
Oracle divergence. The protocol acts on its oracle's price. During a violent move, or a thin market on the specific venues an oracle samples, that number can differ from the price elsewhere. You can be liquidated at a level that never printed on the exchange you were watching.
Neither of these has a CeFi analogue that bites as fast, because in CeFi a human looks at an unusual print before acting on it.
How to actually manage it
Do not borrow at max LTV. The ceiling is the protocol's risk limit, not a target. Treat the liquidation threshold as your reference and work back from it with a real cushion.
Model the drawdown, not the rate. The rate determines what the loan costs. The buffer determines whether you keep the collateral. Our liquidation calculator shows the Bitcoin price at which a given position gets closed.
Watch the debt, not just the price. Interest compounds into your LTV. A position you have not touched in three months is closer to the edge than when you opened it.
Decide whether you want a cure window at all. If you cannot monitor a position continuously, the honest answer may be that an on-chain loan is the wrong instrument, and a custodial lender with a 72-hour window is worth the higher rate. That trade is set out in CeFi vs DeFi Bitcoin loans.
The rate difference is partly the price of this
On-chain borrow rates sit well below custodial rates, and this is a large part of why. You are giving up the cure window, the human review, the fixed rate, and the dollars, and taking a variable rate with automatic closure instead. The gap between the two rails is measured daily in our Rate Index, and the custody premium article puts a number on what that protection costs.
Cheaper is not the same as better value. It is a different product with a different failure mode, and the failure mode is the one described above.
Where to look next
Compare every on-chain market on rate, LTV and liquidation threshold on DeFi Bitcoin loans, or by protocol on the protocol index. For the custodial side of the same decision, see what happens to a Bitcoin loan when the price drops and the full lender set on the comparison tool.
This is not financial advice
borrow/on/bitcoin is a comparison publisher, not a lender, broker, or financial advisor. On-chain borrow rates and liquidation thresholds are variable, are read from the protocols at our daily snapshot, and change continuously without notice. Nothing here is a recommendation of any protocol or lender. Borrowing against Bitcoin carries real risk including the total loss of your collateral, and on-chain liquidation is automatic and irreversible.