Are you a Bitcoin holder looking to unlock liquidity without selling your BTC? Nectra’s Bitcoin-backed stablecoin protocol will change the game for you! Built on Citrea, Bitcoin’s first zero-knowledge rollup, Nectra offers a decentralized, non-custodial way to borrow against your Bitcoin and earn yield through its native stablecoin, nUSD.
Imagine accessing liquidity from your Bitcoin (BTC) holdings without selling them or trusting a centralized lender. That’s the promise of Nectra, a groundbreaking permissionless lending protocol that lets you borrow nUSD—a Bitcoin-backed stablecoin—while retaining full control of your assets.
Nectra offers a transparent, on-chain solution in a market dominated by opaque terms and custodial risks. Whether you’re a long-term Bitcoin holder or a DeFi enthusiast, this innovation transforms Bitcoin from a passive store of value into an active financial asset.
Did you know? Traditional Bitcoin loans often require overcollateralization and intermediaries. Nectra eliminates these issues with self-custody loans and user-set interest rates.
Understanding the Problem: Why Bitcoin Holders Need Better Financial Tools
Bitcoin has long been hailed as digital gold—a store of value that protects against inflation and centralized monetary systems. However, holding Bitcoin often means missing out on opportunities to use it as working capital.
Many investors are reluctant to sell their BTC due to tax implications or the fear of missing out on future price increases. This is where decentralized Bitcoin loans come into play. While traditional custodial lenders may offer short-term liquidity, they often involve high fees, opaque processes, and counterparty risks.
What if there were a trustless, transparent, and permissionless alternative? Nectra’s Bitcoin-backed stablecoin protocol aims to deliver exactly that.
Introducing Nectra: the new era of Bitcoin finance
Launched in June 2025, Nectra is a decentralized borrowing protocol that enables users to take out non-custodial Bitcoin loans by using cBTC (Citrea BTC) as collateral. The platform issues nUSD, a soft-pegged USD stablecoin that is backed entirely by over-collateralized Bitcoin deposits.
Unlike centralized finance (CeFi) platforms, Nectra operates without intermediaries. All operations, from opening a loan position to redeeming nUSD, are executed via immutable smart contracts on Citrea. This ensures full transparency and eliminates the risk of fund rehypothecation.
Key Features of Nectra
- Non-custodial loans: You retain full control of your Bitcoin at all times.
- User-set interest rates: Set your own APR when opening a loan position.
- High LTVs: Borrow up to 83.3% of your Bitcoin’s value.
- Instant access to nUSD: A stablecoin redeemable for the equivalent of $1 in cBTC.
- Earn real yield: Deposit nUSD into the Savings Account and earn competitive returns.
For more details, check out the official documentation at docs.nectra.xyz
How Nectra Works: A Step-by-Step Guide
To better understand how Nectra’s Bitcoin-backed stablecoin protocol functions, let’s break down the process:
1. Deposit your cBTC as collateral
First, bridge your Bitcoin to Citrea to obtain cBTC. Once deposited, the cBTC becomes your collateral for opening a loan.
2. Open a loan position and borrow nUSD
You can open a loan position by selecting your desired annual interest rate. Lower interest rates make your position less likely to be redeemed but also reduce your borrowing costs.
The maximum loan-to-value (LTV) ratio is set at 83.3%, meaning you can borrow up to that percentage of your cBTC’s value in nUSD.
3. Use your nUSD freely
Once borrowed, nUSD can be used for trading, investing, or even paying bills. It’s a flexible tool for leveraging your Bitcoin holdings.
4. Earn yield with the savings account
Deposit your nUSD into the savings account to start earning passive income. The APR fluctuates based on market demand and supply dynamics within the protocol.
Why Nectra is a Game-Changer for Bitcoin Finance
1. Non-Custodial Bitcoin Loans: True Financial Sovereignty
Unlike centralized platforms such as BlockFi or Celsius, Nectra ensures that you never relinquish control of your BTC. Your keys, your coins—always.
Key Features:
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Self-custody lending: No third-party risk.
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Immutable smart contracts: No rehypothecation or hidden fees.
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High LTV (83.3%): Borrow more against your Bitcoin collateral.
2. nUSD: The Decentralized Bitcoin-Backed Stablecoin
nUSD is a stablecoin pegged to the USD and backed 1:1 by BTC. It combines the stability of fiat currency with the censorship resistance of Bitcoin.
How it works:
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Deposit BTC into Nectra’s protocol.
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Mint nUSD instantly.
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Use nUSD for trading, payments, or earning on-chain yield.
Pro tip: Holders can earn passive income by depositing nUSD into Nectra’s savings account. This feature is rare among DeFi lending platforms.
3. Built on Citrea: Bitcoin’s First ZK Rollup
Citrea uses zero-knowledge proofs (ZKPs) to enable private, scalable transactions on Bitcoin. This makes Nectra faster and cheaper than Ethereum-based DeFi protocols.
Advantages of ZK Rollups:
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Lower fees than Ethereum L1.
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Bitcoin-level security with DeFi flexibility.
Nectra vs. Traditional Bitcoin Lending: Key Differences
| Feature | Nectra (Decentralized) | Centralized Lenders |
|---|---|---|
| Custody | Non-custodial | Requires handing over BTC |
| Interest Rates | User-set APR | Fixed by platform |
| Transparency | Fully on-chain | Opaque terms |
| Liquidation | Automated, fair | Opaque triggers |
How to Use Nectra: A Step-by-Step Guide
1. Connect Your Wallet
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Use a Bitcoin-compatible wallet (e.g., Leather, Unisat).
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Ensure you’re on Citrea testnet (mainnet coming soon).
2. Deposit BTC and mint nUSD
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Select your desired loan-to-value (LTV) ratio (up to 83.3%).
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Receive nUSD instantly.
3. Earn yield or repay the loan
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Option 1: Use nUSD for trading or payments.
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Option 2: Deposit into the savings account to earn passive income.
Pro Tip: Monitor your collateral ratio to avoid liquidation—a best practice in DeFi borrowing.
The Nectra Points Program: Early Adopter Rewards
To incentivize users, Nectra will launch a points program before its mainnet release. Early participants may qualify for the following:
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Governance tokens
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Fee discounts
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Exclusive NFT rewards
FAQs
1. What is a Bitcoin-backed stablecoin?
It is a stablecoin collateralized by BTC (e.g., nUSD). Unlike algorithmic stablecoins, it is fully backed by Bitcoin reserves.
2. How does Nectra ensure loan security?
Through overcollateralization and on-chain liquidation mechanisms. If the value of your BTC drops, the system automatically repays the loan.
3. Can I lose my Bitcoin using Nectra?
Only if the BTC price crashes and you fail to replenish your collateral. However, the 83.3% LTV buffer mitigates this risk.
4. Is Nectra available on Ethereum?
No. It’s built on Citrea, a Bitcoin ZK rollup for maximum security and BTC-native DeFi.
5. How does Nectra compare to MakerDAO?
While MakerDAO issues DAI against Ethereum assets, Nectra exclusively offers Bitcoin-backed loans to avoid Ethereum’s gas fees.
Conclusion
Nectra is more than just another DeFi protocol; it’s a paradigm shift for Bitcoin holders. By combining self-custody, transparency, and yield opportunities, Nectra unleashes the potential of BTC without compromising its ethos.
Ready to try it?
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Visit Nectra’s app
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Read the docs
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Join the Discord for updates.