Frequently Asked Questions

Non-custodial means you never hand over unilateral control of your Bitcoin to Lygos or any third party. Your collateral is locked in a Discreet Log Contract (DLC) on the Bitcoin blockchain—a programmable 2-of-2 arrangement where both you (the borrower) and the lender must cooperate to move funds.

Unlike custodial lenders who take possession of your Bitcoin and can rehypothecate or lose it (as happened with Celsius, BlockFi, and others), your collateral remains secured on-chain in a contract address that you co-sign. No single party—not Lygos, not the lender, not the oracle—can unilaterally access or move your Bitcoin.

DLCs are a Bitcoin-native smart contract technology introduced in 2017 by Thaddeus Dryja (co-creator of the Lightning Network) and enhanced by Taproot in 2021. A DLC functions like a programmable 2-of-2 multisig with a critical difference: all possible outcomes are pre-signed before any collateral is locked.

On-chain, the transaction appears as a standard P2WSH transaction with no loan details publicly visible, preserving your privacy.

A standard multi-sig is a simple "M-of-N" signing arrangement—for example, 2-of-3 means any two keyholders can authorize a transaction. While this provides shared control, it doesn't enforce specific conditions or outcomes.

DLCs go further by pre-defining exactly what can happen with the locked funds. All possible outcomes (repayment, liquidation, default) are agreed upon and cryptographically signed before any collateral is locked. The outcome that actually executes depends on real-world data attested by an independent oracle. This means:

• Neither party can unilaterally redirect funds to an unexpected destination
• The contract enforces loan terms automatically based on objective data
• Settlement is deterministic and verifiable—no discretion, no disputes

No. Unlike competitors who simply claim they don't rehypothecate, Lygos's non-rehypothecation is cryptographically enforced. Your Bitcoin is locked in a DLC on the Bitcoin blockchain, not held in a custodial wallet that could be used for other purposes. Neither Lygos, the lender, nor any other party can access, trade, lend, or otherwise use your collateral while your loan is active. This isn't a policy promise—it's a technical reality enforced by the Bitcoin protocol.

Lygos partners with Magnolia Financial, an independent third-party oracle operating as a licensed Money Services Business (MSB). Magnolia was built by Lightning Labs and Fold Bitcoin alumni and is registered as a custodian, giving them the regulatory standing and technical expertise for this critical role.

The oracle's function is strictly limited to attestation—publishing cryptographic signatures that confirm real-world events have occurred (such as: "the loan was repaid" or "the BTC/USD price reached $100,000"). These attestations enable the corresponding pre-signed transactions to be completed and broadcast.

No. The oracle cannot access, move, or redirect your Bitcoin under any circumstances. Here's why:

The oracle operates in a "blinded" configuration—meaning it has limited information about the loans it services. Specifically, the oracle:

• Does NOT know the DLC address where your collateral is locked
• Does NOT know the amount of BTC you've pledged
• Does NOT know your identity or wallet addresses
• Does NOT know the UTXOs involved in your loan

The oracle only knows the price thresholds it needs to monitor, the repayment address to watch, and the maturity date. Even a malicious oracle can only trigger outcomes that were pre-signed by both you and the lender—it cannot create new destinations or redirect collateral to arbitrary addresses.

Lygos aggregates BTC/USD prices from multiple institutional-grade sources including Coinbase, Deribit, and Kraken. The methodology uses a median of 3 prices from 5 total sources, automatically removing outliers, stale prices, and invalid data points to ensure robust, manipulation-resistant price discovery.

Our roadmap includes adopting a 2-of-3 threshold oracle setup for added resilience. This multi-oracle approach will strengthen our trust-minimized setup by eliminating any single point of failure.

Lygos offers the following LTV structure:

• Initial LTV (50–70%): This is the loan-to-value ratio at origination. Most borrowers choose an LTV between 50–65%, providing a substantial cushion against price volatility.
• At-Risk Threshold (80%): This is an informational alert only, not a margin call. If your LTV approaches 80%, you'll receive notifications, but there is no mandatory action required.
• Liquidation LTV (90%): If your LTV reaches 90%, collateral may be liquidated to repay the loan. There is no mandatory margin call; liquidation is automatic at breach.

No. Lygos loans are made entirely based on your Bitcoin collateral. We do not perform credit checks, and your credit score has no bearing on loan approval or terms. This makes our loans accessible regardless of your credit history or jurisdiction.

All Lygos loans are currently denominated in USD. Interest rates, principal amounts, and repayment obligations are calculated in US dollars.

Loan proceeds are funded in the form of stablecoins (USDC) to your designated wallet address. We fund in stablecoins because this allows the independent oracle to objectively verify that the loan has been funded and that repayments have been made—a critical requirement for our non-custodial architecture.

We are actively working to add seamless off-ramping to fiat in bank accounts through third-party partners. For now, you can convert USDC to fiat using any exchange or on-ramp service of your choice.

Loans are typically funded within 48 hours, and often much faster. After you complete onboarding and lock your collateral in the DLC, funding is generally processed the same day or next business day.

If Bitcoin's price declines and your LTV rises, you can top up your loan with additional Bitcoin to reduce your LTV. This process involves rolling into a new DLC with the increased collateral amount, which lowers your effective liquidation price and provides more cushion against further price drops.

No. Each loan creates a separate, dedicated DLC for your specific collateral. Your Bitcoin is isolated in its own on-chain contract, not commingled with other borrowers' funds. This means another borrower's liquidation or default has no impact on your collateral or loan.

No. Lygos exclusively supports native Bitcoin (BTC) as collateral. We do not accept wrapped Bitcoin (WBTC, tBTC), staked Bitcoin, or any other asset. This Bitcoin-only approach means you maintain the security guarantees of the Bitcoin network without introducing additional trust assumptions from bridges, wrapping protocols, or other chains.

Because your collateral is locked in an on-chain DLC—not held in Lygos infrastructure—a platform breach cannot result in loss of your funds. Active loans remain cryptographically secured by the Bitcoin protocol regardless of what happens to Lygos's systems.

No. The Lygos app wallet is entirely self-custodial. Lygos has no visibility into your wallet funds and no control over your keys. You may also import any BIP-39 native SegWit wallet generated externally if you prefer to use your own seed phrase.

Lygos offers loans ranging from $25,000 to $100,000,000. We focus on serving high-net-worth individuals, businesses, and institutions who need meaningful liquidity without selling their Bitcoin holdings.

Borrowers use Lygos loans for a wide variety of purposes, including business funding and expansion, real estate investments and down payments, portfolio diversification, operational expenses, tax obligations, and major purchases—essentially any legitimate use where you need liquidity but don't want to sell your Bitcoin.