How Clapp’s 0% Interest Crypto Loans Work: Borrow USDT Against Bitcoin and Ethereum

Borrowing against crypto no longer sounds exotic. Many long-term holders already use their Bitcoin or Ethereum as collateral to access liquidity without selling. The confusing part usually comes next: interest.

Many platforms often advertise 0% interest crypto loans, but they are rarely explained. With Clapp, the idea is simple once you understand the structure. The key is that Clapp uses a credit line, not a traditional loan — and that changes how interest works. Let’s break it down.

What Is a Credit Line?

Clapp does not give you a fixed loan that starts accruing interest immediately. Instead, you open a crypto-backed credit line. You deposit BTC or ETH as collateral. Based on its value, Clapp gives you a borrowing limit. That limit is available to you, but you are not required to use it.

Think of it as having liquidity on standby.

• No obligation to borrow

• No fixed loan term

• No interest just for having access

What matters is how much you actually use.

How 0% Interest Works for Clapp Credit Line

With Clapp, unused credit is free. As long as you haven’t borrowed anything, you pay 0% interest. Even after you borrow, the unused portion of your credit line remains interest-free.

Interest applies only to:

• The amount you borrow

• Your loan-to-value ratio (LTV)

When your LTV stays below 20%, borrowing costs remain low and manageable. The 0% condition applies to everything you haven’t borrowed.  

For example, a user deposits BTC or ETH worth $50,000 → Clapp opens a credit line for them. → If the user borrows nothing at first, the interest is 0% → Later, they borrow $7,500 in USDT, and LTV becomes 15%. → Interest applies only to $7,500. The remaining available credit stays unused and costs nothing. 

The user keeps full exposure to your BTC or ETH. If they repay the $7,500, interest stops immediately and your full credit line becomes available again.

Why LTV Matters 

Loan-to-value is the main risk control in crypto lending. With BTC and ETH, prices move. Even if your borrowed amount stays the same, your LTV can change as the market moves. Keeping LTV low gives you:

• A buffer against volatility

• Lower liquidation risk

• More predictable borrowing costs

Clapp’s structure rewards conservative borrowing, not maximum leverage.

A Common Misunderstanding

“0% interest” does not mean borrowed funds are always free.

With Clapp:

• Unused credit = 0% interest

• Borrowed funds = interest based on LTV. It should be below 20%.

That distinction is important. It keeps expectations realistic and avoids unpleasant surprises.

Final Thoughts

Clapp’s approach to crypto loans focuses less on catchy rates and more on structure.

You get access to liquidity without paying for it upfront. You pay interest only when you actually borrow, and only in proportion to risk. Used carefully, this turns borrowing into a practical financial tool rather than a constant cost. Understanding that structure is what makes the 0% claim meaningful.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.