Memecoins, often seen as speculative assets, are finding new strategic value in decentralized finance (DeFi). $BITCOIN has become one of the most popular collaterals on Teller and is being used in an interesting DeFi strategy. By using $BITCOIN as collateral for DeFi cash advances, holders can maximize their token’s potential without selling, while tactically increasing their holdings.

The Borrow & Swap Strategy

Borrow & Swap is a strategy used by DeFi users to grow their token holdings without selling existing assets. By using a token as collateral to obtain a cash advance, acquiring additional tokens with the funds, and then using the newly obtained tokens as collateral for another advance, individuals have the potential to incrementally grow their token holdings.

The Borrow & Swap process with a DeFi cash advance operates entirely on-chain and eliminates common risks like liquidation or margin calls. Teller’s DeFi cash advances are time-based and don’t depend on price oracles, offering a more stable borrowing experience for DeFi leverage strategies.

The Benefits of Using Teller DeFi Cash Advances

1. Unlock Liquidity Without Selling: Token holders can secure cash advances without having to sell, thus maintaining holder exposure and position.
2. Flexible Loan Terms: Teller’s time-based loan structure gives borrowers the option to renew loans or repay them based on market conditions and personal strategy, offering more control and flexibility.
3. Preserve Long-Term Growth Potential: The Borrow & Swap strategy exemplifies how token holders can maximize their holdings without selling, reflecting a strong belief in the token’s long-term value.

Examining the Borrow & Swap Strategy Using $BITCOIN and Teller

One Teller user demonstrated the utility of $BITCOIN in DeFi using the Borrow & Swap strategy. Starting with 127,290 $BITCOIN (valued at $9,824), the user took out a $2,550 USDC loan, using $BITCOIN as collateral. With the loaned USDC, they purchased an additional 31,670 $BITCOIN (valued at $2,444) and secured a second loan for $633 USDC using the newly acquired tokens as collateral.

The user repeated this process two more times, continually leveraging their $BITCOIN holdings to secure additional loans. By the end of the loop, their position had grown to 183,010 $BITCOIN, worth $14,125—an effective leverage of 1.4x. The entire strategy was executed on-chain, with a daily interest cost of $10.61 plus gas fees.

Memecoins as a DeFi Tool

The Borrow & Swap strategy highlights how $BITCOIN can evolve beyond its role as a speculative memecoin. With Teller's DeFi cash advances, $BITCOIN holders can expand token utility by leveraging the tokens for liquidity to grow their holdings.

As $BITCOIN continues to lead in cash advance volume on Teller, it’s clear that holders see the token as more than just a memecoin. By using $BITCOIN as collateral, memecoins are transforming into functional assets within DeFi, allowing holders to fully maximize their potential in the cryptocurrency market.

How to Use $BITCOIN to get a Time-Based Loan

Teller allows users to obtain short-term loans secured by their crypto holdings. These short-term loans are best thought of as DeFi cash advances rather than traditional loans. Here’s how it works:

Step 1: Connect a Compatible Wallet

Connect a cryptocurrency wallet to the Teller platform using supported wallets like MetaMask, Coinbase Wallet, or others that support Web3 connections.

Step 2: Review Tokens with Available Loan Offers

View the tokens in the wallet that are eligible for loan offers. The Teller platform will display the available loan opportunities based on the tokens held. This will directly show users what memecoins can be borrowed against. If a memecoin does not have an active loan listing, the user can submit a loan request to be filled by a lender from the Teller Dashboard.

Step 3: Examine Loan Offers

Review the available loan offers for eligible memecoins. Consider the available offers based on the following metrics:

Loan-to-Value Ratio (LTV): The percentage of the token's value that can be borrowed

Annual Percentage Rate (APR): The interest rate applied to the loan

Duration: The length of time the loan is active

Step 4: Select and Execute a Loan

Choose a preferred loan offer and initiate the loan process in a single transaction.  The transaction will move the chosen collateral (tokens) into an on-chain escrow smart contract. The $USDC or $ETH that was borrowed is then transferred directly to the borrowers wallet.

Step 5: Repayment

At the end of the loan duration, repay the loan along with any applicable fees to release the collateral from the escrow smart contract. Borrowers can also repay or extend their loan at any time, paying only the current interest due.

Ready to turn memecoins into utility tokens? Learn more and explore available DeFi cash advances on teller.org