Lygos Finance acquires Atomic Finance to launch non-custodial, DLC-powered bitcoin loans

Bitcoin’s above $100,000, and there are plenty of sat stackers who want to tap into their holdings without selling.

Lygos Finance has launched to do just that.

Bitcoin credit market provider Lygos Finance emerged from stealth today, announcing its acquisition of Atomic Finance to create a non custodial, discreet log contract (DLC)-powered bitcoin-backed lending service.

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Learn More Powered by Money.com - Yahoo may earn commission from the links above. Lygos Finance Co-Founders Jay Patel and Francis Corvino and Atomic Finance Co-Founders Matt Black and Tony Cai started brokering the combination at Blockspace’s 2025 OPNEXT conference.

“[We] had been in communication a little before that, but OPNEXT was really where the idea came together,” Patel, who also acts as Lygos’ CEO, told Blockspace.

Lygos Finance will allow users to take out USD loans on their bitcoin holdings managed with DLCs, a transaction format that uses smart contracts to execute “if, then” outcomes for the loan. When taking out a loan, a borrower deposits BTC into a 2-of-2 multisignature address, of which it holds one private key while the lender holds the other. DLCs will automatically manage loan functions, such as releasing bitcoin collateral upon payback, recognizing collateral top offs during a margin call, liquidating collateral after a failed margin call, and other tasks.

Magnolia Financial will provide third party oracle services for Lygos’s bitcoin-backed loans to make sure the DLCs stay on task. DLCs can only reference data on Bitcoin’s blockchain, so they require data feeds called oracles to intake external information to manage the loan’s contractual obligations. Magnolia’s oracle is responsible for providing data on bitcoin price, loan duration, payments, and other inputs to ensure that the DLC’s smart contracts can automatically execute loan functions, such as unlocking collateral once a loan is paid off, liquidations, and other functions.

“We’re removing the in-house responsibility [for Lygos] of running an oracle … it requires us to basically be the regulated, trustworthy third party entity. We are getting regulated for other reasons, but that makes us pretty trustworthy in a lot of people’s eyes,” Magnolia Financial Founder Harsha Goli told Blockspace.

Patel told Blockspace that Lygos Finance will likely require a 60-75% loan-to-value ratio for its platform’s lending (so, for example, if you have $100,000 in BTC collateral, you could take out $60,000-75,000). He continued to say that interest rates “will depend on the size [of the loan]” but that they would be “competitive” and lower than 15%.

Lygos is working with “family offices and institutional investors” as lending partners to provide loan liquidity. The company will use USDC and USDT via Ethereum to settle loan payments. The company said that it can facilitate loans ranging from $100,000 to $100 million. At launch, the company has opened up a private beta to test the platform before opening it up to the public later this year.

Story ContinuesLygos Finance joins Lava in the new crop of non-custodial bitcoin lending providers that has emerged this cycle. These newcomers are hoping to restore trust in bitcoin-backed lending with more transparent, non-custodial options in contrast to the opaque, custodial bitcoin lenders of yesteryear that went bust in 2022’s bear market given poor fund management and asset rehypothecation.

Patel said that Lygos wants to provide safer, easier solution to allow bitcoiners to leverage their stacks without rehypothecation risk.

“And so I think it does present something new for for Bitcoiners and folks who have seen collapses over the last cycle or two in terms of a better solution … folks still need to fund their lifestyle, fund purchases, fund investments. And I think the credit layer on top of Bitcoin has been growing pretty rapidly over the past few years, and I think it’ll continue to.”

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