How to Borrow Against Your Crypto Without Selling (Kamino & Spark Finance)

If you believe an asset will be worth more in five years, selling it to raise cash today is the most expensive thing you can do. Borrowing against it is the alternative.

How collateralised lending works

The mechanics are the same as a mortgage, compressed into a few clicks:

1. You deposit an asset — Bitcoin, Ethereum, Solana, or a tokenized stock — into a lending protocol.
2. The protocol values it and lets you borrow up to a fraction of that value, usually in stablecoins.
3. You pay interest on what you borrowed.
4. When you repay, your collateral is released in full.

You never sold. If the collateral triples in value while the loan is outstanding, the gain is still yours.

Where people do this

Two of the most widely used venues:

• Kamino (on Solana) — lending markets for SOL, stablecoins, and a growing set of tokenized assets.
• Spark Finance (on Ethereum) — a lending protocol in the Sky/Maker ecosystem, commonly used for borrowing stablecoins against ETH and wrapped Bitcoin.

Both are non-custodial, meaning the protocol holds the collateral in a smart contract rather than a company holding it for you.

Why borrow instead of sell

• You keep the upside. Selling ends your exposure. Borrowing does not.
• You may defer a taxable event. In many jurisdictions a loan is not a disposal, whereas a sale is. Rules vary by country — confirm with a local accountant before assuming this applies to you.
• You gain flexibility. The cash can cover an expense, fund a new position, or sit as a buffer.

The risk you must respect

This is the part people skip, and it is the part that costs them everything.

Your collateral is volatile. If its price falls far enough, your loan becomes too large relative to what is backing it, and the protocol sells your collateral automatically to repay the debt. That is liquidation, it happens without warning, and it usually happens at the worst possible price.

Three habits that prevent it:

1. Borrow far less than you are allowed to. If a protocol permits a 75% loan-to-value ratio, borrowing to 30% gives you enormous room to survive a crash.
2. Watch the ratio, not the price. What matters is debt divided by collateral value, not the headline coin price.
3. Keep repayment funds ready. A small stablecoin reserve lets you pay down the loan quickly if the market turns.

What it costs

Interest on stablecoin borrowing typically runs in the mid single digits annually, though rates float with demand and can spike. Add network fees for opening, adjusting, and closing the position. A loan that is cheap at 5% is not cheap if you leave it open for a decade without a plan.

A sensible starting structure

• Deposit collateral you genuinely intend to hold for years.
• Borrow no more than a third of its value.
• Set yourself a hard line — for example, act the moment your ratio reaches 50% — and never negotiate with it.
• Track the position and its health continuously, not once a month.

Key takeaway

Borrowing against crypto keeps your long-term position intact and turns it into working capital. It only goes wrong when people borrow near the limit and stop watching. Stay conservative and the strategy is durable.