Templar is the first Cypher Lending protocol. It enables users to borrow stablecoins using BTC, or any asset on any chain, without wrapping, bridging, or relying on centralized custodians. It uses a Multi-Party Computation (MPC) network, plus overcollateralization and smart contract liquidations, to stay secure and solvent.

Based on Cypherpunk principles, Cypher Lending enables permissionless borrowing, lending, and deployment of markets for any asset on any chain while:

- Respecting the user’s sovereignty

- Prioritizing privacy and UX

- Open Sourcing all code

- Remaining non-institutional: meaning no Trusted Third Parties or KYC

Templar offers several advantages over other Bitcoin borrowing options. Unlike past centralized borrowing options like BlockFi or Celsius, which are now bankrupt, Templar provides on-chain transparency: you always know exactly where your BTC is, without worrying about it being loaned to risky counterparties. Unlike many solutions like Aave, Morpho, Compound that rely on wrapped BTC (e.g., WBTC or cbBTC) held by custodians like BitGo or Coinbase with limited transparency, Templar uses native BTC, sent directly from your wallet. Templar also provides highly competitive borrowing rates with special markets for whales and referrals. Plus, early adopters receive incentives—such as discounted rates and Templar Points—that can lower borrowing costs to near zero.

• Start by opening up app.templarfi.org to access the Templar application front end.  For first time users it is recommended to follow the video or text walkthrough below.  

• Video Walkthrough link: https://drive.google.com/drive/folders/1rzHr_91YMbjcPyTBb2bbPlcVV0-b2lmn?usp=sharing 

• Text Walkthrough: As a borrower, it’s simple: choose which asset you want to use as collateral (e.g. BTC) and which stablecoin you’d like to receive (e.g. USDT), decide how much you want to borrow, and paste in a receiving address for the stablecoins. Then, send BTC to the provided deposit address, and your loan is created—stablecoins are sent to your chosen destination once the transaction is finalized. As a lender, it’s just as easy: pick a stablecoin to provide and the market you want to lend to, then send the stablecoins to the provided address to start earning rewards.

It currently requires an ETH or NEAR wallet to interact with templar. In the near future we plan to unlock the ability  to interact with Templar with a basic wallet that only requires sending and receiving your preferred crypto asset. Once unlocked, you can send a Bitcoin transaction and receive stablecoins on your chosen network—or even directly to an exchange—without needing a smart contract compatible wallet. Templar Protocol will handle all of the smart contract complexities for you. Smart contract compatible wallets (e.g. Metamask, Phantom, Meteor) will always be available for users requiring more control.

The main costs to interact with Templar are the gas fees for sending a token (e.g., Bitcoin Layer 1 fees, which vary by network conditions), the origination fees to open a loan (when applicable), and the interest paid to borrow against your assets (based on market rates).

Templar cannot freeze user funds. However, some stablecoins may be frozen by the issuer (e.g. Tether, Circle) if the issuer detects criminal activity.

Multi-Party Computation (MPC) is the technology that lets users send BTC directly into Templar without wrapping or bridging. Templar splits the Bitcoin private key among network parties, each performing a small computation that together forms a standard BTC transaction. In Templar’s MPC system, only one honest participant is needed to prevent dishonest actions—even if all but one collude, that single honest computation blocks fund movement, creating a highly secure system.

• The MPC network’s code runs in a Trusted Execution Environment (TEE), a specialized hardware module that prevents malicious or unauthorized code from running on the nodes. The TEE also ensures node operators’ key shares never leak and protects against long-range attacks. 

• Looking ahead, Templar plans to enhance security by expanding the MPC network, ultimately incorporating a computation from the user’s computer. This would mean dishonest actions could only occur if the user’s computer is hacked and the MPC network simultaneously goes rogue with the same BTC destination address—an extremely unlikely scenario.

Templar Protocol and the NEAR MPC network do not have centralized custody on user funds. Templar smart contract delegates custody to the NEAR MPC network, which divides custody of users’ funds among the nodes at all times, ensuring no malicious activity occurs as long as one honest participant remains in the network. In the future, Templar plans to include a computational contribution from the user’s computer as part of the MPC network, making malicious behavior nearly impossible. The use of MPC as a solution to the Trusted Third Party Problem was originally proposed by Nick Szabo in 2001.

• Depositing BTC to Templar is as simple as it gets. Once the terms of the loan are agreed upon, the protocol provides the user with a QR code or deposit address for a standard Bitcoin Layer 1 transaction. After the transaction is confirmed (2-6 blocks, depending on transaction size), the stablecoins for the loan are released to the user.

• You can find a video walkthrough showing the deposit flow at this link.

BTC within Templar just sits there as collateral. It is never loaned out or otherwise touched. The only time the BTC is moved is either when the loan is repaid in full or in the case of a liquidation scenario, when the smart contracts and market makers liquidate the BTC collateral to avoid bad debt within the protocol.

Templar NEVER rehypothecates users’ funds and remains 100% backed at all times.

Templar currently accepts only Layer 1 BTC, but we plan to support major BTC LSTs in the future. We will assess engineering timelines and user demand to decide which coins to support first.

Each market in Templar is isolated from the others, so BTC borrowers and lenders are not affected by the collateral or solvency of other markets.

• Borrowing on Templar is extremely simple. To start, a user selects an asset they will be depositing and stablecoin they would like to receive (type and network). The user is then prompted to select how large of a loan they would like to take out. Once the terms of the loan are finalized, a QR code or deposit address is provided to the user as well as a destination address for the stablecoins. When the deposit transaction is finalized (2-6 blocks for BTC depending on size), the stablecoins are released to the address the user provided.

• You can find a video walkthrough showing the full borrowing experience at this link.

The amount a user can borrow is a function of many different variables. In particular, the collateral type, dollar amount of collateral provided, the max borrow ratio a market allows, and total amount of stablecoins within the protocol. In general, it is recommended that a user keep 2–3X more collateral in the protocol than loan value to avoid being liquidated during volatile market conditions. 

To keep the upside potential of the collateral asset while gaining access to cash and to legally avoid incurring capital gains taxes from selling your assets. Since Templar does not require wrapping or bridging, borrowing does not trigger a taxable event. This is covered more in the use cases portion of the FAQ.

• When a user would like to close out their borrow position, they must deposit the original principal taken out on their loan plus any accrued interest/fees. At that time the loan will be closed and the user’s collateral will be released to their desired destination.

• Video walkthrough of paying off a loan and closing a borrow position can be found at the following link: https://drive.google.com/drive/folders/1rzHr_91YMbjcPyTBb2bbPlcVV0-b2lmn?usp=sharing

Interest costs vary and are market-determined rates. We aim for the average borrow rate to float between 0% to 8%, with discounts for early users, referral codes, and whale deposits. In extreme cases, rates can exceed 10%, but this typically doesn’t last long due to market incentives. Additionally, borrowers earn Templar points that offset some of their interest, sometimes even paying them to borrow.

Borrow positions typically remain open until closed by the user or in the event of a liquidation. However, some loan products have a fixed maximum duration, e.g. 1 year, after which the loan will automatically close if the loan has not already been repaid. Upon auto-closure, the collateral will be used to repay the loan, and any remaining funds will be returned to the user.

• For stablecoin lenders, the onboarding process is extremely simple: pick a stablecoin to provide and a market to lend to. Then you send the stablecoins to the provided address and start earning rewards.

•  You can find a video walkthrough for supplying stablecoins at this link.

Templar currently has markets for USDC and USDT. Templar can add any stablecoin provided there’s pyth oracle support and the stablecoin is on a supported chain. If there’s a stablecoin that meets this criteria, you can create a new market that uses the stablecoin of your choosing.

Templar currently supports sending and receiving stablecoins on NEAR and Ethereum. We will expand to include Solana, Stellar, EVM L1s and L2s, and Bitcoin L2s in the future. You can find the full list of upcoming chain integrations in our Roadmap blog post: https://www.templarfi.org/blog/roadmap

As with most borrowing and lending markets, the primary yield for stablecoin lenders comes from borrowers. This includes several sources: interest rates paid by borrowers, origination fees to open a loan (if applicable), liquidation fees distributed to lenders, and additional incentives Templar may provide like Templar Points & cash incentives.

The yield for lending stablecoins varies depending on market conditions and Templar incentives. In the early days of Templar, yields will be higher due to incentives paid by Templar as USD and as points with total yields being 8-20%+. As time goes on, Templar incentives will play less of a role.

Stablecoins supplied to the protocol are used by borrowers. Overcollateralization requirements ensure there’s always sufficient collateral to protect lenders. During liquidation, lenders receive principal and owed interest, plus a liquidation fee bonus, if applicable.

Users can withdraw their stablecoins at any time after the initial lock-up period, as long as excess stablecoins are available in the protocol. If, in an extreme scenario, all stablecoins are utilized, the protocol automatically lifts the interest rate borrowers pay to high levels, attracting more stablecoins and significantly boosting the yield for lenders. While the market is waiting for more stablecoin deposits or loans to be repaid, a withdraw FIFO queue will be used to ensure fair distribution of stablecoins to suppliers in the order in which they requested.

The interest rate borrowers pay lenders follows an adaptive curve based on the percentage of total stablecoins utilized on Templar. For example, it may rise linearly from 2% APR at 0% utilization to 8% APR at 90% utilization. Above 90% utilization, rates increase dramatically to encourage more stablecoins to join the platform and benefit from the high yields. Learn more about this mechanism here: https://github.com/Templar-Protocol/contract-mvp/pull/34#issue-2900562571

When users request to withdraw stablecoins they’ve supplied, they enter the withdrawal queue. Typically, they wait only a short time as the smart contract processes the release of funds. In rare cases where no stablecoins are available for withdrawal, users stay at the front of the queue on a first-come, first-served basis. Meanwhile, the protocol raises borrowing rates significantly to draw in more stablecoins from new suppliers or encourage existing users to repay their loans within those markets.

Liquidations occur when a borrowed position exceeds its minimum collateral ratio (MCR). Then, the underlying collateral can be purchased at a slight discount by a liquidator in exchange for paying off the loan, ensuring no bad debt for the protocol. Borrowers should avoid this at all costs to prevent losing money and potentially triggering a taxable event by ensuring loans are repaid and sufficient collateral is available to maintain a healthy collateral ratio.

The collateral ratio measures how much collateral a user has compared to their current debt position; it also serves as an indicator of the loan’s health. It’s calculated by dividing the dollar value of the collateral by the amount of debt borrowed against it. For example, if a user has a $100 debt backed by $200 in BTC, the user has a collateral ratio of 200%.

A collateral ratio of 200% to 300% is recommended to avoid liquidation risk. For risk-averse borrowers we recommend 400% or higher to ensure your collateral is highly secure against liquidation, giving you ample time to add more collateral or repay your loan if the market turns unfavorable.

The loan-to-value ratio (LTV), commonly used in finance to measure a loan’s risk, is the inverse of the collateral ratio. For example, a 200% collateral ratio equals a 50% LTV.

Yes, liquidation should be avoided at all costs, partly because of the liquidation penalty. This penalty incentivizes liquidators to provide enough stablecoins to close the loan; in return, they purchase your collateral at a slight discount.

The main way to avoid liquidation is to add more collateral, moving your loan’s current borrow percentage to a healthier level. Alternatively, you can repay your loan when it nears the liquidation threshold.

The Minimum Collateral Ratio (MCR) is 120%. Due to the price of Bitcoin falling, a $100 debt position is now backed by $118 worth of BTC collateral, making the loan eligible for liquidation. A liquidator offers $112.10 for the BTC (95% of its value, as priced by an oracle), and the smart contract accepts the bid. The liquidator keeps part of the spread ($118 - $112.10 - slippage) and the stablecoin supplier and the protocol split the remaining amount after the outstanding loan is repaid ($112.10 - $100).

• Unlock BTC liquidity without triggering a taxable event or losing upside potential—especially valuable for long-term Bitcoin holders with significant capital gains.

• Borrow stablecoins against BTC without needing a smart contract wallet like MetaMask; users can send a BTC transaction and receive stablecoins directly in their preferred wallet, exchange, or network.

• Hedge BTC exposure by using borrowed stablecoins to go short on futures or purchase put options.

• Lend stablecoins on Templar to earn yields from interest rates, origination fees, and liquidation spreads.

• Increase portfolio leverage through looping, though this is recommended only for experienced DeFi users to avoid potential pitfalls.

• Access USD liquidity from BTC without navigating the restrictive KYC/AML processes of centralized institutions.

• Earn Templar platform rewards by participating in borrowing or lending; in some cases, this can lead to being paid to borrow, especially in the protocol’s early days.

• Deposit borrowed stablecoins into payment platforms that accept them, or convert USD to cover day-to-day expenses.

The risks within Templar arise from the MPC network, general borrow/lend market risks, oracle risk, and smart contract risk. Additionally Templar has an insurance fund and a roadmap to add additional security features in the future. Each one of these will be explained in more detail below.

• Templar splits shards of cryptographic keys among network parties, each contributing computation that forms a standard BTC transaction. With MPC, only one honest participant is needed to prevent dishonest actions; even if all but one party colludes, the single honest computation prevents funds from moving, yielding a 1/N security assumption.

• The MPC network’s code runs in a Trusted Execution Environment (TEE), a specialized hardware module that prevents malicious or unauthorized code from being injected or executed by nodes. The TEE also keeps node operators’ key shards secure and guards against long-range attacks.

• Templar plans to enhance security by expanding the MPC network, with the goal of incorporating a computation from the user’s computer. This would limit dishonest actions to cases where the user’s computer is hacked and all of the MPC network members simultaneously go rogue with the same BTC destination address—a highly improbable scenario.

• In the future, Templar also plans to support native Bitcoin multisigs for holding collateral where 1 key is held by the user to preserve self custody, 1 by the MPC network, and 1 by either a liquidator or custody provider that supports programmatic access or another MPC network. This allows for fund recovery in the event of MPC network down time.

Borrowing and lending platforms face the risk of bad debt leading to insolvency, a common issue with centralized institutions like BlockFi and Celsius in the crypto industry. In contrast, smart contract-enabled platforms like Aave and Templar mitigate this through overcollateralization and automated liquidations. Each Templar market has a minimum collateral ratio (MCR). When a loan is below the MCR, liquidators can liquidate the position by supplying stablecoins matching the user’s original principal, interest, and fees. In return, liquidators purchase the collateral at a discount, creating free-market-driven incentives to prevent bad debt in the protocol.

To maintain overcollateralization, Templar requires real-time collateral valuation. We leverage the industry-leading Pyth oracle, which averages BTC prices across major centralized exchanges and uses a smoothed moving average to ensure accuracy and prevent oracle manipulation. Additionally, each lending market is isolated; if bad debt or market contagion occurs, it remains confined to that market. By contrast, a pool-based model lets contagion spread across markets, assets, and users.

Smart contract risks can be reduced through audits. Templar is engaging three auditing firms with expertise in Bitcoin integration, Solidity, and the NEAR tech stack to rigorously test borrowing, lending, and liquidation functions under various market conditions.  Templar audits can be found at the following GitHub link: https://github.com/Templar-Protocol/contracts/tree/dev/audits.

Templar will also have a formal verification audit by the end of 2025, which is a rigorous security assessment for software—especially smart contracts and blockchain protocols—using mathematical methods to prove correctness against a formal specification, offering a much higher assurance of safety than traditional audits.

No, Templar smart contracts are immutable and the team cannot modify them once they are deployed. Instead, we can release new versions (e.g., v1, v2, v3) to introduce additional functionality. Like Bitcoin Core’s approach to updating Bitcoin—where new versions are shipped but older ones remain usable—we aim to maintain backward compatibility, ensuring existing contracts continue to function as intended.

No, the Templar team cannot steal users’ funds. We lack admin or multisig access to the smart contracts or their associated funds, ensuring that control remains fully decentralized and secure.

As a final safeguard against bad debt, Templar will establish an insurance fund, funded gradually from a small share of protocol revenue. The fund provides compensation for stablecoin lenders for rare losses due to edge cases.

For BTC collateral, Templar plans to implement a 2-of-3 multisig for the deposit address, with keys held by the user, the MPC network, and a neutral third party. This third party could be a smart-contract-callable MPC network or a custodian with a programmatically callable key. This enables users to maintain self-custody of their funds, supports fund recovery if the MPC network goes down, and facilitates liquidation if oracle conditions are met.

Templar Points are our way of tracking and acknowledging Templar’s earliest supporters before we launch a token to incentivize borrowers and lenders. They accumulate for individual addresses, with rewards distributed later. The number of points awarded decreases over time, ensuring early users who take the greatest risks and bootstrap protocol liquidity are compensated most.

Templar incentivizes borrowing and lending with USD-based rewards to boost protocol liquidity in the early days. These include lower borrowing rates and higher lending yields.

Templar does not collect or store personal information from any users.  This is one of the key principles of Cypher Lending.

Templar prioritizes user privacy and plans to enhance it over time. To prevent predatory liquidation hunting, we’ll implement differential privacy. Additionally, zero-knowledge proofs (ZK-proofs) will be used to maintain on-chain privacy, keeping loan information confidential while still verifiable. Our privacy roadmap can be found in the attached blog post: https://www.templarfi.org/blog/cypher-lending-meets-cypher-cash

Templar invite codes and referral links are used to gain access to markets with favorable interest rates and to track how much liquidity individual users bring in, rewarding them for helping grow the protocol.

Yes, users can deploy their own markets on Templar, which is designed to be fully customizable. Our goal is to let the market determine the optimal settings for key variables, allowing the most effective markets to attract the greatest liquidity. The full list of configurable market parameters is available here: https://github.com/Templar-Protocol/contract-mvp/blob/main/common/src/market/configuration.rs#L17

The Templar logo and wordmark are available in black, white, and ivory at this link: https://drive.google.com/drive/folders/1-ARgRrurz6aBfQ5UtRFx0cmpZ24FvfNn?usp=sharing. The Templar team reserves the right to request removal if the content misrepresents the brand.

No: all Templar brand elements are reserved for our products. The Templar team may request removal of content we don’t endorse.

You can create images and content using Templar brand elements; however, the Templar team reserves the right to request removal of any content.

Initially, Templar doesn’t natively support vault creation. Over time, we plan to introduce this feature, enabling advanced users to design and manage strategies that optimize risk and return by leveraging multiple markets. Other users will be able to invest capital in these vaults, paying a small fee to the vault curator.

Templar’s roadmap focuses on enhancing its trust-minimized, privacy-first, chain agnostic lending platform with the following features:

• Privacy Enhancements: Private lending via ZCash & its shielded asset technology, wallet-less usage, differential privacy for liquidation obfuscation, onchain cash markets, and zero-knowledge smart contracts.

• Product Features: Flexible market parameters (rate curves, loan durations, fees), curated DeFi vaults, chain-abstracted markets, sponsored gas transactions, partial liquidations, fixed interest rate loans, yield accrual on collateral, and a JS SDK for developer integrations.

• Ecosystem Integrations: Adapters for external lending protocols, yield and positional token integration.

For full details, see the Templar Roadmap.