Dollars against bitcoin, at a fixed rate for a fixed term, with no margin call.
Who it serves. Holders of bitcoin who want dollars without selling it and without a margin call; lenders who want a repayment fixed at the outset.
How it is composed. One obligation and one lien: the borrower owes the repayment at maturity, and the debt is secured by the borrower's collateral, locked in the vault.
The repayment is set by auction. In the borrower's auction the borrower names the most it will repay and lenders bid it down; in the lender's auction a lender posts capacity and borrowers bid rates, all winners borrowing at one clearing rate.
Repaid, the collateral goes back to the borrower. Not repaid by the due date and a grace period fixed at creation, the loan is breached and anyone may enforce the lien: the collateral passes to the lender.
What is different. No liquidation and no margin call: nothing during the term depends on a price. The repayment and the maturity are fixed when the auction closes.
The bullet loan is live on v1, on Arbitrum One, audited by Sherlock: a working proof of concept for the design. On v2 the same loan is being rebuilt from the building blocks.
Status: Live (v1, audited) · v2: in development on Arbitrum Sepolia, unaudited; its building blocks are specified, and the core's first testnet deployment is pending.
Caveats. The design removes the timing risk, not the price risk. If the collateral falls below the repayment, a borrower may choose not to repay; the lender then takes collateral worth less than it is owed.
On v1, a borrower who does not repay loses the whole collateral, even where it is worth more than the debt: there is no surplus.
On v1 the curated collateral is WBTC, a wrapped bitcoin token. Whether a token carries the asset behind it is a matter for its issuer and custodian, which the protocol cannot replace.
A known issue on v1: repayment of a USDC loan reverts if USDC refuses transfers to the current holder of the lender position, which puts the borrower's collateral at risk. The details are in the known issues.
Rates come only from auctions; no rate is promised. The v2 contracts are unaudited.
Nothing on this page is an offer to provide this instrument or a recommendation to use it. The v2 contracts are unaudited.
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