Flow Traders joins Lombard Finance as the pilot partner for its Bitcoin Onchain Credit Strategy, expanding institutional access to BTC-backed stablecoin borrowing.
The Euronext-listed trading firm, liquidity provider, and market maker will use Bitcoin collateral to obtain stablecoin loans through on-chain markets.
The arrangement targets a decentralized finance segment that remains relatively small. Lombard Finance plans to expand Bitcoin-based credit through large institutional platforms. Its framework aims to help regulated firms post collateral and access liquidity efficiently.
Lombard connects its lending strategy across networks through Chainlink’s Cross-Chain Interoperability Protocol. The system enables BTC.b collateral to move from Avalanche to Ethereum. Ethereum supports the strategy due to deeper stablecoin liquidity and wider access to compatible lending markets.
Private Collateral Supports Institutional Loans
Traditional DeFi lending often requires borrowers to deposit collateral into shared pools. Those pools can face utilization constraints, limited liquidity, and security risks. Such conditions may prevent institutional firms from using them for large transactions.
Lombard instead separates the borrower from the collateral provider and uses an underwriting structure. Flow Traders will supply Bitcoin to Lombard as collateral coverage. The firm can then access stablecoins for other operations through the Cap automated marketplace.
‘Asset managers have a real, persistent need to borrow stablecoins, but until now, DeFi markets weren’t built in a way they could access. This structure changes that. By separating the borrower from the collateral provider, the parties involved have made it possible for regulated, institutional trading firms to tap into onchain credit for the first time,’ said Jacob Phillips, Co-Founder and CEO of Lombard Labs.
Cap Manages Isolated Loans and Collateral
Cap operates as a private credit platform offering principal protection for lenders. It automates lending processes and confirms that each loan carries on-chain financial guarantees. A dedicated underwriter verifies and protects the collateral supporting every transaction.
Each Flow Traders loan will remain siloed and private to the firm. Lombard Finance said the structure also extends Bitcoin reserves into traditional private credit markets. Flow Traders can monitor its isolated collateral through the Cap lending market.
Bitcoin Lending Liquidity Expands
Bitcoin lending currently holds about $4.31 billion in liquidity following the latest BTC price recovery. Lombard Finance ranks as the second-largest protocol and carries more than $6 million across two chains. It also generates $3.23 million in annualized fees.
Lombard Finance is still the second-largest lender based on BTC collateral. | Source: DeFi Llama
The new credit strategy builds on Lombard’s Bitcoin Earn program. That offering has attracted more than $1 billion in deposits and over 38,500 users since launch. Lombard has also opened Bitcoin Earn to institutional and retail clients.
Lombard uses BTC.b and LBTC, two wrapped Bitcoin assets, within its multichain strategy. Most reserves are currently held on Ethereum, while smaller markets operate on Base and Solana.
