Active mainnet and “Cypher Lending” model: dollars in stablecoin against native BTC, without intermediaries, with MPC network and immutable smart contracts.
Initial commitments for 100 million dollars – as confirmed by Bitcoin Magazine – and with custody concentration signals discussed in industry analysis Binance, with permissionless access and focus on privacy.
Templar Protocol has launched its own mainnet introducing a native Bitcoin lending that avoids the need for custodians and wrapped tokens, as highlighted in a recent official communication (BitcoinEthereumNews).
The project adopts the “Cypher Lending” model, combining a decentralized network based on Multi‑Party Computation (MPC) with immutable smart contracts, thus ensuring automated collateral management.
In this context, the teams claim to have secured liquidity commitments of 100 million dollars and aim to maintain an architecture without intermediaries.
According to data collected by industry analysts and on-chain checks conducted near the launch, the mainnet recorded test transactions for collateralization in the first 24 hours of activity.
The editorial analysts who examined the technical documentation identified the need for external audits on the MPC code and price oracles to confirm operational robustness (Tether invests in Zengo: the future of self-custody for stablecoins).
What’s New: Native BTC Lending Without Wrapping
Users can obtain dollar stablecoins by depositing native BTC directly, without the need for bridges or wrapping (WBTC). Collateral management is fully automated on-chain, with predefined and verifiable rules.
Access to the protocol is permissionless, with a design that prioritizes privacy and does not require KYC procedures – an approach that, according to sources, aims to avoid regulatory complications in certain jurisdictions (Bitcoin Magazine). That said, the absence of entry barriers remains a distinctive feature of the project.
How it works in brief
The system locks native BTC through a Multi-Party Computation (MPC) network, which is a distributed signing technology, and coordinates the issuance of loans in stablecoin through smart contracts that manage collateralization, interest, and potential liquidations.
In fact, the architecture does not involve wrapping, bridges, or traditional custodians, thus automating the entire lending process and reducing operational friction points.
Why It Matters for the Bitcoin Market
The custody of BTC is increasingly concentrated in the hands of large institutions – some industry analyses indicate that institutional providers may hold significant shares of the total in circulation (Binance records withdrawals of 9,000 Bitcoin in 24 hours).
A native and decentralized lending model, like the one proposed by Templar, thus promises to reduce dependence on centralized counterparts and shift credit activities towards more transparent and verifiable on‑chain systems. It should be noted that the transition to permissionless infrastructures also aims to strengthen the overall resilience of the ecosystem.
Main Features
- Automatic collateralization of BTC through immutable smart contracts, with codified and transparent rules.
- Open-source architecture without central administrators, in line with a transparent model verifiable by the community.
- Support for native assets on Bitcoin and, prospectively, on other chains to expand the protocol’s coverage.
- Plan for the implementation of advanced privacy techniques, such as zero-knowledge and differential privacy, to mitigate unwanted exposures.
Technical Details and Security
The security of the system is based on two pillars: the use of MPC technology for the distribution of signatures in the custody of deposits and the use of immutable smart contracts to manage lending mechanisms.
The goal is to avoid discretionary interventions on funds and ensure transparency in risk management (Bitcoin Magazine). In this context, the alignment between off-chain and on-chain components remains crucial.
This approach depends on the quality of the open-source software, the resilience of the p2p network, and the correct implementation of price oracles.
In any case, aspects such as the number of MPC nodes, the governance model, and the presence of any admin keys need to be thoroughly verified to understand the actual degree of decentralization.
Risks and Limitations to Consider
- Possible bugs or vulnerabilities in smart contracts and MPC protocols, with potentially systemic impacts.
- Risk of collusion or compromise of MPC nodes, with potential repercussions on the custody of users’ funds.
- Obvious risk of liquidation due to BTC volatility and the accuracy of price feeds, especially during turbulent market phases.
- The absence of KYC, which could have regulatory implications depending on the jurisdiction and the use of the protocol.
- Issues related to the state of governance and the actual degree of decentralization, elements still to be publicly verified and with complete audits.
Roadmap and Next Steps
- Implementation of advanced privacy techniques, including zero-knowledge and differential privacy, to enhance on-chain data protection.
- Integration with major prime brokers and wallet providers to enhance protocol accessibility and expand adoption (Coinbase Wallet: 4.7% APY rewards for those who hold USDC).
- Expansion to additional native assets, in a cross-chain perspective aiming for a broader application perimeter.
Context: DeFi on Bitcoin, beyond historical limits
DeFi has achieved remarkable success on Ethereum, while on Bitcoin, DeFi solutions have often required wrapping operations or the use of centralized systems.
Templar’s native approach aims to bridge this gap by offering lending on “pure” BTC, with lower operational friction and reduced counterparty risks.
However, the transition to fully on-chain models requires solid technical implementations and an active community in code verification (Ethereum: here’s the roadmap for Vitalik Buterin’s privacy).
Key Numbers
- Initial commitments declared: 100 million dollars, confirmed by various industry sources (Bitcoin Magazine).
- BTC holdings in centralized custody: recurring estimates indicate percentages above 10% with institutional providers; concentration is a topic of discussion in market analyses updated to 2025 (Bitcoin: 52% of Americans have sold stocks or gold to purchase BTC).
- Future implementation of advanced privacy features, based on ZK technologies and differential privacy, already included in the roadmap.
- Data updated as of September 30, 2025.
FAQ
What is Templar’s “Cypher Lending”?
This is a lending model that leverages MPC technology for the custody of native BTC and uses smart contracts to issue stablecoins in a permissionless manner, without resorting to wrapping. In short, the logic is on‑chain and does not depend on traditional custodians.
Is KYC required to use the protocol?
No, the access declared by the protocol is permissionless. However, the regulatory implications may vary depending on the jurisdiction, with possible differences between markets (Qatar: new crypto regulation coming).
What is the collateralization ratio (LTV)?
At the moment, it has not been publicly communicated; the risk parameters and liquidation thresholds are outlined in the official technical documentation. That said, the LTV remains an essential driver for risk management.
Is the issued stablecoin native or managed by third parties?
The protocol provides for the issuance of stablecoins based on BTC collateral. The exact nature, whether native or delegated to third parties, will be clarified in the official project specifications.
Conclusion
Templar Protocol introduces an innovative native Bitcoin lending, designed to reduce reliance on centralized intermediaries and enhance user privacy through an automated on‑chain mechanism.
The proposal, highlighted by sources such as Bitcoin Magazine, represents a significant step towards a more decentralized and transparent DeFi ecosystem on Bitcoin, although aspects related to governance, smart contract security, and independent audits remain to be clarified.
Ultimately, the effectiveness of the model will depend on the technical execution and the resilience of the MPC infrastructure in the long term.