Granite Protocol, a Bitcoin liquidity platform operating on the Stacks blockchain, recently achieved a listing on Borrow on Bitcoin, a rate comparison platform run by Sypher Capital. This listing became active on July 29, enabling Granite's lending terms to be assessed alongside both centralized and decentralized competitors, presenting a compelling financial narrative.
The platform boasts a variable borrowing rate of just 1.66% APR. For perspective, centralized finance lending rates are currently between 7.25% and 18.9% APR, while EVM-based DeFi markets see averages of 3.57% to 8.02% APR. This substantial difference in rates positions Granite as a competitive player in the market.
#How Does Granite Protocol Function?
At its core, Granite allows users to deposit sBTC, the Stacks network’s Bitcoin-equivalent asset, as collateral for borrowing USDCx. Users can convert their Bitcoin to sBTC through the official Stacks bridge and subsequently use this asset as collateral.
One of the defining features of Granite is its use of isolated liquidity pools. Unlike traditional models, each market operates independently, ensuring that issues in one pool do not impact others. This design minimizes risks inherent in pooled liquidity models. Additionally, Granite does not engage in rehypothecation, meaning it refrains from lending out collateral deposited by users. The protocol is also designed with softer liquidation mechanics, offering a more forgiving approach to managing undercollateralized positions compared to traditional hard liquidation strategies. Notably, Granite Protocol is not accessible to users in the United States.
#What is the Current Landscape of Bitcoin DeFi?
Reflecting on the broader DeFi ecosystem, the total value locked (TVL) for sBTC hit a peak of $545 million in Q1 2026, while total deployed DeFi capital across the Stacks ecosystem reached $121 million during the same timeframe. However, Granite’s TVL has decreased significantly from approximately $26 million to a range of $7.5 million to $12 million, indicating fluctuations in user engagement and market conditions.
Borrow on Bitcoin is not a lending platform but a smart tool for rate comparison, designed to help users evaluate various lending options, including those offered by Granite. By listing on this platform, Granite gains visibility with users seeking the best terms for Bitcoin-backed loans, which can enhance its market presence.
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#What Are the Implications for Bitcoin Investors?
A borrow rate of 1.66% with zero rehypothecation risk presents a stark contrast to the 7% to 19% rates offered by centralized platforms. This situation is particularly beneficial for institutions that have suffered from the fallout of collapsing centralized lenders in preceding downturns.
Granite’s isolated pool structure addresses the systemic risks highlighted by the failures of platforms like Celsius and BlockFi, where one bad position can undermine an entire platform's balance sheet. Granite's architecture is explicitly designed to prevent such chain reactions, promoting a more resilient lending environment.
However, it is important to note that American investors cannot use Granite Protocol, which imposes a significant limitation on its growth potential.