Jack Mallers’ payments firm Strike is rolling out bitcoin-backed loans it calls “volatility-proof” – designed to keep borrowers from being wiped out by sudden price swings. The product, announced Tuesday, aims to solve the biggest pain point in crypto lending: forced liquidations when collateral value drops.
Strike says the loans use a dynamic collateral management system that adjusts in real-time to market moves. Unlike traditional overcollateralized loans that trigger a fire sale if bitcoin dips below a fixed ratio, this system rebalances automatically. Borrowers can draw down against their BTC without constantly monitoring the price floor.
But "volatility-proof" does not mean risk-free. The fine print: if a borrower misses an interest or principal payment at maturity and fails to pay within a grace period, their collateral can still be partially liquidated. So the protection only applies to market-driven volatility – not to credit defaults or missed payments.
The launch comes as Strike, best known for its lightning network payment infrastructure, pushes deeper into lending. Mallers has long argued that bitcoin’s volatility is a bug, not a feature, for everyday finance, and this product is a direct attempt to hedge that volatility for borrowers. The company did not disclose the specific loan-to-value ratios or the grace period length.
For crypto traders, these loans offer a novel way to access liquidity without the constant fear of a margin call during a drawdown. But the product still carries counterparty risk: Strike holds the collateral, and any technical or governance failure could leave borrowers exposed. The company says the loans are fully collateralized and that no external liquidity is needed.
Strike is accepting applications starting today. The real test will be how the system holds up in a sharp bitcoin crash – and whether borrowers treat the "volatility-proof" label as a guarantee or just a better buffer.
Strike launches bitcoin loans that adjust automatically to prevent forced sell-offs during price drops
Strike introduced bitcoin-backed loans designed to avoid forced selling by adjusting collateral levels as bitcoin’s price changes. Bitcoin borrowers benefit by facing fewer sudden losses during market swings, though missed payments can still cause partial sell-offs.