Solution Design: Native Bitcoin Lending

Bitcoin lending in Side Protocol allows BTC holders to lock their assets in a timelocked contract as collateral and borrow other assets from liquidity pools on Side Chain. The protocol features an automated on-chain liquidation mechanism in which the locked BTC may be forfeited if pre-signed conditions are fulfilled and attested by the protocol’s oracle.

Unlike traditional Bitcoin lending solutions that rely on custodial wrappers, bridges to external networks, or peer-to-peer contracts, Side Lending is built directly on Bitcoin’s UTXO model and native scripting capabilities. This design enables users to borrow against their native BTC in a fully non-custodial manner—without custodians, without rehypothecation—while maintaining compatibility with DeFi primitives and composability on Side Chain.