The Four-Year Rhythm: The earliest that bitcoin collateral can be wound down is four years, aligned with bitcoin's four-year halving cycle. The loan carries a single-digit interest rate and has a maturity of 10 years. Credit markets operate around the concept of subordination - which loans get paid off first if a borrower has multiple loans. The most senior loan (paid off first) is the most creditworthy and demands the lowest yield. This idea of seniority is about to be flipped on its head by Battery Finance's loan product. If a borrower posts bitcoin as collateral, this loan would automatically become the most senior loan - not because of contractual priority, but because of behavioral prio...
From: Structured Credit