Single-Collateral Explained: What It Is and Why It Matters in Crypto

When you borrow crypto without a bank, you need to put up something of value as security—that’s called single-collateral, a system where one type of asset, like ETH or BTC, is used as the only backing for a loan. Also known as single-asset collateralization, it’s the simplest way to get leverage in DeFi without risking multiple assets at once. Unlike multi-collateral systems that let you mix USDT, ETH, and SOL, single-collateral keeps things clean: one asset in, one loan out. It’s not flashy, but it’s reliable—and still used by major platforms today.

This model is closely tied to wrapped assets, tokens like WBTC or cbBTC that represent Bitcoin on Ethereum-based networks. These wrapped versions let you use Bitcoin as collateral on Ethereum DeFi protocols, even though Bitcoin itself can’t natively interact with smart contracts. That’s why you see so many single-collateral loans using WBTC: it’s Bitcoin, but made to work in DeFi. The same logic applies to stETH or wIOTA—assets wrapped to fit into lending systems that only accept one type of backing. Single-collateral also connects to DeFi lending, the practice of borrowing and lending crypto through automated smart contracts instead of banks. Platforms like Aave and MakerDAO started with single-collateral because it’s easier to audit, price, and liquidate. Even today, when multi-collateral options exist, many users stick with single-collateral to avoid complexity and reduce risk.

But here’s the catch: single-collateral is only as safe as the asset you use. If ETH drops 40% overnight, your loan could get wiped out—even if you only borrowed 50% of your collateral’s value. That’s why these systems often require over-collateralization: you might need $1,500 worth of ETH to borrow $1,000. It’s conservative, but it works. And that’s why you’ll find single-collateral still alive in niche DEXs like Wagmi (IOTA EVM) or HB DEX, where users want to avoid Ethereum fees and stick to one trusted asset. You won’t find it on every platform, but where it exists, it’s there for a reason: simplicity, transparency, and lower attack surface.

What you’ll find below are real-world reviews of platforms that still use single-collateral models—or failed to make them work. Some are dead ends with $0 volume. Others are quiet but steady tools for believers in specific chains. No fluff. No hype. Just what’s actually usable in 2025, and why some systems still hold up while others collapsed under their own weight.