If you are pricing an onchain Bitcoin loan in August 2026, here is where rates sit, how much they moved during the month, and why the cheapest number on the board is the one to treat most carefully.
The short version: the TVL-weighted average variable rate to borrow USDC against wrapped Bitcoin is 4.34% APR as of 16 August, across 16 pools on 10 protocols holding roughly $4.7 billion in supply. That is about six points below what centralized lenders charge. For the live, daily-updated picture, the BoB DeFi Bitcoin Rate Index is the source.
The headline: lowest variable USDC rate by protocol
This is the lowest available variable rate to borrow USDC against a Bitcoin-backed asset on each protocol, as of 16 August 2026.
| Protocol | Market | Network | Variable APR | Supply | Collateral model |
|---|---|---|---|---|---|
| Granite | sBTC to USDC | Stacks | 1.76% | $5M | Isolated |
| Zest Protocol | sBTC to USDC | Stacks | 2.34% | $10M | Risk groups |
| Euler v2 | LBTC to USDC | Ethereum | 3.59% | $69M | Per vault |
| Compound v3 | cbBTC to USDC | Ethereum | 3.93% | $351M | Isolated |
| Aave v3 | wBTC to USDC | Ethereum | 3.99% | $2,183M | Pooled |
| Morpho | cbBTC to USDC | Ethereum | 4.54% | $305M | Isolated |
| Kamino | cbBTC to USDC | Solana | 5.89% | $107M | Pooled |
| Benqi | BTC.b to USDC | Avalanche | 6.60% | $18M | Pooled |
| Fluid | cbBTC to USDC | Ethereum | 6.93% | $9M | Isolated |
| Dolomite | wBTC to USDC | Arbitrum | 7.53% | $4M | Pooled |
The published index is TVL-weighted, so it is not the simple average of that column. Weighting by supply pulls the index toward the deep Ethereum markets and lands at 4.34%, rather than the 4.71% you get by averaging the ten protocol lows equally. Four protocols are new to this report since June: Granite and Zest on Stacks, Kamino on Solana, and Fluid on Ethereum.
A note on the basis
Our June report quoted 4.42% from a simple average across markets that included USDT pairs. The index is now USDC-only, deduplicated where several Bitcoin collateral types share one lending pool, and weighted by total value locked. Restated on today's basis so the comparison is like for like, the monthly averages are 4.33% in June, 4.44% in July, and 4.44% in August. The methodology is documented on the ranking methodology page.
The month in one number, and why that is misleading
The August average was 4.44%. The month it describes looked like this:
| Weighted index | Lowest market | Highest market | |
|---|---|---|---|
| Range across August | 4.34% to 4.77% | 1.66% to 1.76% | 7.37% to 13.59% |
The index itself stayed inside a 43 basis point band. Individual markets did not. Daily highs across the set reached 13.59% on 15 August and 12.09% on 13 August, and the floor held near 1.7% throughout. Someone borrowing in the wrong market on the wrong day paid roughly eight times the rate someone else paid the same afternoon.
That dispersion, not the average, is the thing to plan around. The index tells you what the market cost; it does not tell you what you will pay.
The contrast with custodial lenders is the story this month
In the same month, centralized Bitcoin lenders averaged 10.42% APR, per our Bitcoin Loan Rates August 2026 report. That figure did not change once. Not on any day in August, and not since 26 June.
So over the same seven weeks, one market repriced every single day and the other did not reprice at all. This is the clearest illustration we have published of what "variable" actually costs you in practice. It is not a footnote on an otherwise similar product, it is the product working differently:
- Custodial pricing is a rate card. A company sets it and revises it when its funding cost or competition changes. Between revisions, it is simply fixed.
- Onchain pricing is a live auction. A contract recalculates it from utilization, block by block. Between blocks, it is whatever the pool's borrowing demand says it is.
Utilization across the markets we track sat at 89% to 90% through August. That is a highly used market, and it is the reason the rates move so readily: when a pool is that full, a modest change in borrowing demand has nowhere to go except into the rate.
The six point gap is real, and it is the compensation for taking that variability, plus self-custody and self-managed liquidation, onto yourself. We walk through the full tradeoff in CeFi vs DeFi Bitcoin loans, and the rate mechanism in what moves the DeFi borrow rate.
Depth and the cheapest rate have come apart
In June, the lowest rate on the board was also one of the deepest markets, which made the headline number unusually easy to act on. That is no longer true.
The floor is now Granite on Stacks at 1.76%, on a market holding about $5 million with utilization near 32%. It is genuinely the cheapest published rate we track, and it is also small enough that a single sizeable borrow could move it substantially. Zest Protocol, also on Stacks, sits just above at 2.34% on roughly $10 million.
At the other end of the depth range, Aave v3 on Ethereum carries about $2.2 billion at 3.99%, and Compound v3 about $351 million at 3.93%. Those rates are more than two points higher than Granite's, and considerably harder to move.
For a small or short loan, the low rate on a thin market can be worth taking. For a large or longer one, a deep market a couple of points higher is a calmer place to sit, and easier to exit. Our ranking methodology weighs rate, utilization, and total value locked together for exactly this reason rather than sorting on the headline rate alone. You can filter and sort every market on the onchain loans page.
Collateral model still matters for risk
The last column is about what happens to your Bitcoin while the loan is open. In an isolated market (Granite, Compound III, Morpho, Fluid), your collateral backs only your own position and is not re-lent. In a pooled market (Aave, Kamino, Benqi, Dolomite), deposits sit in a shared pool, which is closer to the rehypothecation some centralized lenders practice.
Two entries resist that binary, and we would rather say so than force them into a column. Euler v2 is modular: collateral treatment is configured per vault, so some Bitcoin vaults hold collateral in escrow and others do not. Zest uses risk groups that isolate asset exposure rather than a single pooled or isolated design. If the distinction matters to you, check the specific vault you are borrowing from rather than the protocol label.
How to read these rates
- They are variable, always. Plan for the rate to move, and note that this August the index moved while the custodial market did not. There is no fixed-term DeFi loan in this set.
- Check utilization, not just rate. At 89% to 90% across the set, these markets are close to the part of the curve where rates climb fastest.
- Self-custody is the point and the burden. No company holds your Bitcoin, but no company manages your liquidation either. If your loan-to-value crosses the threshold, the contract liquidates you automatically, often faster than a centralized lender would.
- Factor in gas and the wallet. Borrowing onchain means a self-custody wallet and network fees, trivial on some chains and meaningful on Ethereum. The lowest rate can be a false economy on a small loan.
- Deeper is steadier. This month the cheapest market is also one of the smallest, which makes that tradeoff sharper than usual.
This is a monthly snapshot
These are 16 August 2026 figures, captured from our daily onchain tracking. DeFi rates change continuously, so for the current number always check the live BoB DeFi Bitcoin Rate Index, and you can download the full daily history as JSON or CSV from the index page. The previous edition is DeFi Bitcoin Loan Rates July 2026, and the custodial comparison is Bitcoin Loan Rates August 2026.
borrow/on/bitcoin is a comparison publisher, not a lender or a protocol. We may earn a commission if you open a loan through a link on this page, which does not affect the rates shown or the order they appear in. Nothing here is a recommendation of one protocol over another, and nothing here is financial advice. DeFi borrowing carries smart-contract, liquidation, and stablecoin risks. Verify all rates and terms in the protocol directly before borrowing.