Where does my Bitcoin sit when I borrow on Diamond Hands?

By Benjamin Whitby · Published 24 October 2026 · Updated 24 October 2026

The short answer

On Diamond Hands by GVNR, your BTC sits in its own isolated vault address, used for your loan only. It stays native on Bitcoin L1, never wrapped, bridged, pooled or rehypothecated. Diamond Hands is self-custodial: GVNR cannot move your BTC. The one exception is liquidation below a 110% collateral ratio. After repayment, it is withdrawable after 6 Bitcoin block confirmations.

Key facts

Why are borrowers asking where their Bitcoin sits?

The answer varies widely between lenders.

On 12 October, Jeonbuk Bank became the first traditional bank in South Korea to lend against bitcoin. The bank does not hold the BTC: a registered crypto service provider keeps it in custody while the bank issues the loan (CoinDesk).

By contrast, Swiss bank Sygnum's MultiSYG, launched on 23 October, holds each client's bitcoin in a dedicated wallet segregated on-chain (Investing.com).

Same asset, different answers to "who holds my BTC?" Before you borrow anywhere, get that answer in writing.

Where exactly is my BTC on Diamond Hands?

In a Bitcoin vault address created for your loan and no one else's. Your BTC is not pooled with other borrowers' BTC, and it is never converted into a wrapped token or moved across a bridge.

[OPEN: One Truth (new question needed, no Q number yet): can a borrower see their loan's vault address and balance on a public Bitcoin block explorer?]

How does my BTC move through a loan?

  1. Deposit BTC. Your BTC goes into the isolated vault for that loan. 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 added to your debt, so you receive the full amount you borrow: for example, borrow 50 UCD and your debt is 51.5 UCD.

  3. Swap. If you need another stablecoin, swap your UCD into USDC or USDT. Your BTC stays where it is.

  4. Repay UCD. Repay the UCD to close the loan. 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.

Who controls the vault?

GVNR cannot move your BTC. The one exception is liquidation: if the collateral ratio falls below 110%, specified liquidators (currently GVNR DAO) can trigger it, and ownership of the BTC is transferred to clear the debt. Your collateral is not lent out or reused; Is my BTC rehypothecated on Diamond Hands? covers that in detail.

[OPEN: One Truth Q16-17: who controls and signs for the BTC vault, which keys are involved (user, GVNR/protocol, other signer) and what signing threshold is required?]

What happens if GVNR or the app goes offline?

[OPEN: One Truth Q70: if GVNR disappears or the front end goes offline, how can a borrower repay and recover their BTC?]

[OPEN: One Truth Q58: can GVNR or anyone else pause or freeze the Diamond Hands contracts or BTC withdrawals, and if so, who holds that power and under what controls?]

What are the risks?

Your BTC sitting in its own vault does not remove the main risk, which is liquidation. If the collateral ratio, the value of the BTC in the vault against the UCD you owe, falls below 110%, the loan is liquidated in full and ownership of the BTC is transferred to clear the debt. Only specified liquidators can trigger it, currently GVNR DAO. Below 150%, the loan shows a warning first.

Diamond Hands is still in Mainnet Beta, with a 100 UCD cap for now. The cap is expected to rise in the coming months.

Frequently asked questions

Where is my Bitcoin held when I borrow on Diamond Hands?

In its own isolated vault address for your loan, native on Bitcoin L1.

Is my BTC pooled with other borrowers?

No. Every loan gets its own isolated vault address, and BTC collateral is never pooled or rehypothecated.

Is my BTC wrapped or bridged?

No. It stays native on Bitcoin L1, with no wrapping or bridging.

Can GVNR move my BTC?

No. The one exception is liquidation: if the collateral ratio falls below 110%, specified liquidators (currently GVNR DAO) can trigger it, and ownership of the BTC is transferred to clear the debt.

Is Diamond Hands self-custodial?

Yes. Each loan has its own isolated vault address, the BTC stays native on Bitcoin L1, it is never pooled or rehypothecated, and GVNR cannot move it except in a liquidation below 110%.

Who holds the keys to my vault?

[OPEN: One Truth Q16-17: who controls and signs for the BTC vault, which keys are involved and what signing threshold is required?]

How long does it take to get my BTC back?

Once you repay the UCD, your BTC is withdrawable after 6 Bitcoin block confirmations.

Sources

All checked 24 Oct 2026.

  1. Investing.com (Sam Boughedda), "Exclusive: Sygnum rolls out MultiSYG bitcoin loans as BTC hits 80% of collateral", 23 Oct 2026: investing.com.
  2. CoinDesk (Francisco Rodrigues), "South Korea just got its first traditional bank loans backed by bitcoin", 12 Oct 2026: coindesk.com.

Related

About the author

Benjamin Whitby

Protocol Lead, GVNR. LinkedIn

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.