Hashi launches on Sui for Bitcoin lending with BitGo, FalconX
Bitcoin finance protocol Hashi has been introduced on the Sui blockchain, with early participation commitments from BitGo, Bullish and FalconX ahead of a planned launch later this year. The platform is designed to enable lending, borrowing and yield on native Bitcoin (BTC) via onchain financial services.
According to an announcement, Hashi aims to provide Bitcoin holders the ability to generate yield on native BTC through onchain lending and borrowing, addressing a segment that remains a small portion of Bitcoin’s overall market. The protocol is being developed primarily by Mysten Labs, a core contributor to the Sui blockchain.
At launch, Hashi will initially focus on BTC-backed lending, allowing users to borrow stablecoins against their Bitcoin, with institutional participants expected to supply liquidity. A Sui Foundation spokesperson said the design seeks to mitigate structural constraints that have limited Bitcoin’s use in decentralized finance, including intermediary reliance and limited visibility into collateral.
The system incorporates onchain verification and programmatic collateral management intended to make BTC lending more suitable for institutional adoption. Hashi will allow native BTC to be used directly in onchain services without wrapped or synthetic representations, with transparency and automated collateral controls positioned as requirements for scale.
Bitcoin remains underutilized in decentralized finance, with approximately 0.22% of its supply — about $3.07 billion — currently deployed in DeFi protocols, according to the announcement and onchain data from DefiLlama.
The rollout includes participation commitments from custodians and infrastructure providers such as Ledger and Cubist. Sui-based DeFi protocols are also expected to support lending, custody and collateral management once the platform goes live.
Hashi plans to use a combination of multi-party computation (MPC) custody and smart contracts on Sui to manage collateral and facilitate lending, with security audits and formal verification slated prior to launch. Additional features under consideration include insurance coverage for BTC collateral and the issuance of Bitcoin-backed bonds. A devnet is expected soon, with mainnet targeted for later this year.
Bitcoin-backed lending shows signs of recovery after the post-FTX downturn
Bitcoin-backed lending contracted sharply following the 2022 failures of BlockFi and Celsius Network, where rehypothecation and opaque risk practices led to substantial user losses. Reuse of customer collateral to support additional loans amplified systemic risks during that period and eroded confidence in crypto lending platforms.
More recently, interest in Bitcoin-backed lending has begun to rebound as regulators and companies evaluate frameworks emphasizing transparency, improved collateral management and reduced counterparty exposure.
In June, the US Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to examine whether cryptocurrencies can be counted as borrower reserves in mortgage risk assessments, signaling a shift toward acknowledging digital assets like Bitcoin without requiring conversion to US dollars.
Also in June, Jack Mallers said Strike had updated its Bitcoin-backed loan agreement to specify that user collateral is maintained in segregated wallets and is not subject to rehypothecation, “never has been, never will be,” according to a post on X.
In January, Coinbase reintroduced Bitcoin-backed loans in the United States, allowing eligible customers to borrow up to $100,000 in USDC against BTC held on the platform. Other companies, including Ledn, continue to provide loans secured by Bitcoin while emphasizing enhanced custody and risk controls.
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