Your Bitcoin, Your Keys, Your Rules: How Debifi's Multisig Actually Works
Mostplatforms will tell you they're "non-custodial." Then you read the fine print and discover your coins are pooled in some shared wallet, accessible whenever the company feels like moving things around.
That's not how we built Debifi.
Every loan on our platform gets its own dedicated multisig escrow. Your Bitcoin doesn't sit in a pool - it's locked in a unique address that requires multiple independent signatures to move. Not just ours. Not just yours. Multiple parties, with the rules enforced at the protocol level.
Here's exactly how it works.
One Contract, One Escrow Address. Always.
When you initiate the loan, we generate a P2SH multisignature Bitcoin address specifically for that contract by using 4 different public keys. Think of it as a vault that needs three out of four keys to open.
Who holds those keys?
- You (the borrower)
- Your lender
- Debifi (for arbitration only)
- An independent Authorized Key Holder (the failsafe)
You deposit Bitcoin directly to that address. Once two on-chain confirmations come through - roughly 20 minutes - your collateral locks in for the full loan term. That's it.
Here's the critical part: nobody can touch those funds alone. You can't. We can't. Nobody can. Any transaction from that address needs three signatures out of four.
That's not a policy - it's cryptographically enforced by Bitcoin's script.
We don't hold your funds. Never have, never will. We keep one key solely for arbitration, and that key is useless without two others agreeing to sign. Your Bitcoin stays verifiable and auditable on-chain, controlled by independent parties who each have their own interests to protect.
Why 3-of-4 Instead of 2-of-2?
Good question. A 2-of-2 multisig sounds secure until someone loses their key or disappears. Now you've got funds locked forever with no recovery path.
A 2-of-3 setup is better, but if the platform holds one key, you're back to trusting them not to collude with one other party. Not great.
Our 3-of-4 structure solves this. Even if one keyholder vanishes - lost phone, forgotten password, goes off-grid for months - the remaining three can still execute the contract according to protocol rules. You get redundancy without creating a single point of control.
That fourth key, held by an independent Authorized Key Holder, handles specific scenarios: dispute resolution or contractually triggered liquidations. It's not a backdoor. It's a tiebreaker that keeps the system functional without giving any single entity unilateral power.
Explicit participants. Explicit thresholds. Verifiable outcomes. That's what trust-minimized lending looks like.
No Rehypothecation. Ever.
Let's be direct: some platforms take your collateral and quietly lend it out again. They call it "capital efficiency." We call it rehypothecation, and we don't do it.
Your Bitcoin stays in its unique on-chain escrow until the loan's fully repaid. There's no pooling. No reinvestment. No creative reuse of collateral.
The lender only transfers funds after they've confirmed your collateral is locked in the multisig. Everything's transparent and observable on the blockchain - no intermediaries skimming value or playing games with your coins behind the scenes.
Transparency You Can Actually Verify
We design for verification, not blind trust. Here's how:
- On-chain visibility: Every contract has its own multisig address. You can track your collateral on any block explorer, anytime. If it's moving, you'll see three signatures on-chain authorizing it.
- Two confirmations required: We don't advance the contract workflow until your deposit has two blockchain confirmations. That's roughly 20 minutes, ensuring transaction finality before anything happens.
- Client-side key control: You generate and store your keys using the Debifi Mobile App on a separate linked device. Your keys never touch our servers. Each signing request requires PIN authentication, 2FA, and device verification - so even if someone compromises your dashboard account, they can't sign transactions without physical access to your device.
- Hardware wallet support: We support hardware wallets that give users full control over key generation and storage.
- Open-source code: We're releasing the Debifi App under an open-source license. Anyone can inspect, verify, and audit our security model. Don't trust us - verify the code yourself.
- Real-time alerts: Margin calls, LTV updates, and liquidation warnings hit your dashboard, mobile app, and email instantly. You're never flying blind.
This isn't security theater. It's an auditable system where you can verify every claim we make.
What Happens When Markets Go Haywire?
Security isn't just about custody - it's about how the system behaves when Bitcoin drops 20% in a day.
Our risk engine follows predictable, rule-based responses. No discretion, no exceptions:
- Over-collateralization from day one: All loans start over-collateralized, so you've got breathing room when markets swing.
- Three-tier margin call ladder: We send alerts at 75%, 80%, and 85% LTV. That's three chances to add collateral, partially or fully repay your loan without any fees, before anything drastic happens.
- Automatic liquidation at 90% LTV: If your position hits 90%, the contract automatically triggers Forced Liquidation. Your collateral gets liquidated according to the terms you agreed to, and any remaining Bitcoin comes back to you.
- 24-hour grace period at maturity: If you don't repay on time, you get a 24-hour window before automatic settlement kicks in. This prevents collateral from being liquidated because you missed a notification.
- Bounded arbitration: In rare disputes, our resolution protocol - executed with the Authorized Key Holder - ensures fairness without compromising the multisig structure. Nobody, including us, can override the 3-of-4 quorum requirement.
Even under extreme conditions, your Bitcoin stays locked, auditable, and recoverable within a transparent, rule-based framework. No black boxes. No surprises.
The Bottom Line
SECURITY ISN'T A FEATURE WE BOLTED ON - IT'S THE FOUNDATION OF EVERY TRANSACTION ON DEBIFI.
Your Bitcoin stays in non-custodial multisig escrow. Movement requires consensus from independent parties. Collateral never gets rehypothecated. Everything's verifiable on-chain.
If you're tired of platforms that ask you to trust them, this is the alternative: cryptographic guarantees enforced by Bitcoin itself.