Home › Learn › Is my BTC rehypothecated on Diamond Hands? # Is my BTC rehypothecated on Diamond Hands? By Benjamin Whitby · Published 23 October 2026 · Updated 23 October 2026 ## The short answer No. On Diamond Hands by GVNR, your BTC is never pooled or rehypothecated. Each loan has its own isolated vault address, and the BTC stays native on Bitcoin L1, with no wrapping or bridging. GVNR cannot move your BTC on its own. The only exception is liquidation, when ownership of the BTC is transferred to clear the debt. ## Key facts - Every loan gets its own isolated Bitcoin vault address. BTC collateral is never pooled with other borrowers' BTC. - BTC collateral is never rehypothecated: it is not lent out or reused in another transaction. - The BTC stays native on Bitcoin L1. There is no wrapped token and no bridge. - Diamond Hands is self-custodial. GVNR cannot move your BTC on its own. - You can add BTC at any time, and withdraw some as long as it would not move the loan into liquidation. ## What does rehypothecation mean? Investopedia defines it as: "Rehypothecation occurs when an asset used as collateral for one party is reused in another transaction" ([Investopedia](https://www.investopedia.com/terms/r/rehypothecation.asp)). For a borrower, that matters because your collateral can end up backing someone else's position. If that chain breaks, getting your asset back depends on more than your own loan. The key question for any lender: once I post my BTC, can anyone else use it? ## Where does my BTC sit on Diamond Hands? On Diamond Hands, your BTC sits in an isolated vault for your loan only, and no one else can use it. 1. **Deposit BTC.** Your BTC goes into an isolated vault for that loan only. It stays native on Bitcoin L1. 2. **Mint UCD.** You borrow UCD, a Bitcoin-backed stablecoin, up to the 66% maximum LTV at opening. The 3% mint fee is charged on the amount borrowed and added to your debt, so borrow 100 UCD and you repay 103 UCD. 3. **Swap.** If you need another stablecoin, swap your UCD into USDC or USDT. 4. **Repay UCD.** Repay before the 12-month term ends, with no early-repayment penalty. No monthly payments are required. 5. **Withdraw BTC.** Once the UCD is repaid, your BTC is withdrawable after 6 Bitcoin block confirmations. While the loan is open, the BTC is locked in the vault as collateral. You can add BTC at any time, and withdraw some as long as it would not move the loan into liquidation. At the end of the 12-month term, the loan can be extended for a further 12 months, for 3% of the outstanding debt at each annual renewal. ## Can GVNR move my BTC? No. GVNR cannot move your BTC on its own. Your collateral is not lent out, pooled or used to back anything else. The only exception is liquidation: if the loan is liquidated, ownership of the BTC is transferred to clear the debt. Liquidation follows fixed rules: it can only happen if the collateral ratio falls below 110%, and only specified liquidators can trigger it, currently GVNR DAO. ## What are the risks? Not being rehypothecated does not mean a loan has no risk. The main risk is liquidation. Your loan is tracked by its collateral ratio: the value of the BTC in the vault against the UCD you owe. Loans open at a minimum of 150%. If the ratio drops below 150%, the loan shows a warning, so you can act before it nears the 110% liquidation threshold. If the collateral ratio falls below 110%, the loan is liquidated in full. Only specified liquidators can trigger it, currently GVNR DAO. You choose how much to borrow, up to the 66% maximum LTV at opening. Borrowing less leaves more room before a fall in BTC brings the loan near 110%. Diamond Hands is also still in Mainnet Beta, with a 100 UCD cap for now. The cap is expected to rise in the coming months. ## Frequently asked questions ### Is my BTC rehypothecated on Diamond Hands? No. BTC collateral is never rehypothecated or pooled. Each loan has its own isolated vault address on Bitcoin L1. ### Is my BTC pooled with other borrowers? No. Every loan gets its own isolated Bitcoin vault address, so your BTC is never pooled with anyone else's. ### Is my BTC wrapped or bridged? No. The BTC stays native on Bitcoin L1, with no wrapping or bridging. ### Can GVNR move my BTC? No. GVNR cannot move your BTC on its own. The only exception is liquidation: if the loan is liquidated, ownership of the BTC is transferred to clear the debt. ### Is Diamond Hands self-custodial? Yes. Diamond Hands is self-custodial. ### Can I add or withdraw BTC while the loan is open? Yes. You can add BTC at any time. You can withdraw some, as long as the withdrawal would not move the loan into liquidation. ### When do I get my BTC back? Once you repay the UCD, your BTC is withdrawable after 6 Bitcoin block confirmations. ### What happens if my loan is liquidated? If the collateral ratio falls below 110%, the loan is liquidated in full. Ownership of the BTC is transferred to clear the debt. Only specified liquidators can trigger it, currently GVNR DAO. ### How is this different from lenders that went bust? Some centralised lenders reused or lent out the BTC customers deposited ([Cointelegraph](https://www.tradingview.com/news/cointelegraph:bd72e1ae8094b:0-bitcoin-loans-are-back-rewriting-the-book-celsius-burned/)). On Diamond Hands, each loan has its own isolated vault address on Bitcoin L1, and the BTC is never pooled, rehypothecated or lent out. ## Sources All checked 23 Oct 2026. 1. Investopedia (Julia Kagan), "Rehypothecation Explained: Definition, Examples, and Impacts", updated 6 Aug 2026: [investopedia.com](https://www.investopedia.com/terms/r/rehypothecation.asp). 2. Cointelegraph (Yohan Yun), "Bitcoin loans are back, rewriting the book Celsius burned", 27 Jun 2025: [tradingview.com](https://www.tradingview.com/news/cointelegraph:bd72e1ae8094b:0-bitcoin-loans-are-back-rewriting-the-book-celsius-burned/). ## Related - [Open the Diamond Hands app](https://app.diamondhands.credit/) ## About the author ### Benjamin Whitby Protocol Lead, GVNR. [LinkedIn](https://www.linkedin.com/in/benjamin-whitby-compliance/) Benjamin Whitby discovered Bitcoin in 2013 and Ethereum in 2014, and has been building in crypto ever since. He has a background in capital markets and regulation and a degree in Physics from the University of Exeter. His focus is BTCFi, Bitcoin as collateral, BTC-backed stablecoins and how digital asset treasuries are reshaping credit. He's building at GVNR, home of Diamond Hands, where Bitcoin holders can borrow without giving up control of their UTXOs. Diamond Hands is a decentralised protocol. Borrowing involves risk, including liquidation of collateral. Carry projections are illustrative model outputs, not return guarantees. Nothing on this site constitutes financial advice. Tax treatment depends on your circumstances, so take your own independent tax advice.