Circle has launched the Digital Asset-Backed Borrowing (DABB) service for Circle Mint’s institutional clients. It allows users to use BTC as collateral and obtain liquidity in USDC without selling their BTC.
The mechanism works as follows: A client deposits BTC, receives cirBTC, places it as collateral in a supported lending protocol, and borrows USDC. The borrowed USDC is directly credited to the Circle Mint balance. To return the collateral, the borrower must repay the loan.
Initially, the service operates on the Arc and Ethereum networks, and Morpho is the first supported lending protocol. In the future, Circle plans to add other platforms, including Aave.
cirBTC is backed by native BTC at a 1:1 ratio, and the reserves can be verified on-chain. The service itself is available only to eligible institutional clients of Circle Mint.