Bob unveils bitcoin vault liquidation engine to power btc supported stablecoin lending
Bob (“Build on Bitcoin”) opened a new framework that powers bitcoin Holders to borrow StableCoins against their BTC while keeping it safe on the Bitcoin network.
The Bitcoin Vault Liquidation Engine addresses several ongoing challenges in Bitcoin lending, such as all-or-nothing liquidations, and multi-day settlements, founder Alexei Zamyatin told Coindesk in a Telegram message.
A vault, in the context of collateral and lending, is a smart contract that securely locks a user’s cryptocurrency as collateral for a loan.
It acts as a trustless escrow, automatically managing the collateral and executing a liquidation (sale of the property) if its value drops too low.
Applying this to Bitcoin could transform the safest and largest crypto asset into active collateral, unlocking trillions in BTC liquidity for use in the decentralized finance ecosystem (Defi) without forcing holders to sell.
Bob’s new design supports partial liquidation, meaning an entire position does not need to be liquid if it goes under water; Only sufficient collateral to restore the health of the loan is liquid.
The engine also allows liquidations to be completed in 10-60 minutes, instead of taking several days that can happen within the BitVM mechanism, the computing paradigm used by projects like Bob to deploy Bitcoin smart contracts.
The challenge is to create a smart contract defi experience unlike what crypto users recognize on other chains like Ethereum.
By allowing lending protocols on any chain to use native BTC as collateral, Bob aims to expand the reach of Bitcoin-backed borrowing beyond wrapped assets like WBTC.
The team said the change could mobilize “billions in dormant bitcoin liquidity,” connecting the $2.2 trillion Bitcoin market with the global on-chain credit system and advancing the broader Bitcoin Defi (BTCFI) movement.
Bob is one of a number of notable projects in the BTCFI sector, which aims to unlock BTC liquidity to power the wider blockchain-based ecosystem. With others Bitcoin Programmability Layer HemI and BTC restaking protocol Babylon.
Update (October 28, 15:10 UTC): Adds a final paragraph mentioning other notable BTCFI projects.
