> For the complete documentation index, see [llms.txt](https://docs.bima.money/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.bima.money/the-collar-loan/how-does-bima-work.md).

# How does Bima work?

## The Idea

Bitcoin sitting in a wallet does nothing. Selling it raises cash but ends your position. Borrowing against it usually means interest that compounds and a liquidation you cannot control.

The Monthly Vault turns your Bitcoin into working capital without any of that. You keep the position. You get USDC at 0%. At the end of twelve months you repay and take your collateral back.

## The 6 Steps

<figure><img src="https://1150339483-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FuV0XpSBB66aR52DO5D6k%2Fuploads%2FA4yM6RJTbUroBW10dNHR%2Fvault-lifecycle.svg?alt=media&amp;token=87103af4-472f-4c9b-8bf5-e2a62a77b5bc" alt=""><figcaption></figcaption></figure>

{% stepper %}
{% step %}

### Deposit  a 7-day window

A new vault opens on the first of each month and accepts deposits for seven days. You deposit tokenised BTC and receive **vault shares** recording your position. When the window closes, the vault is sealed.
{% endstep %}

{% step %}

### Collar placed

The pooled collateral is placed with **FalconX** under a collar, through vault infrastructure operated by **Accountable**. Your put and call strike levels are set at this point and published to you.

FalconX provides the capital released against the collared position.
{% endstep %}

{% step %}

### Claim your USDC arrives

The capital returns to the vault, and you claim your share directly. You can claim **50% of your deposited BTC value**, at **0% interest**.
{% endstep %}

{% step %}

### Loan period twelve months

Nothing to service. No interest accrues, no liquidations, no margin calls, and your strikes cannot change.
{% endstep %}

{% step %}

### Repayment at maturity

You repay the USDC you claimed. The amount is exactly what you borrowed  it does not grow.
{% endstep %}

{% step %}

### Redemption after a short window

The collar settles against your strike levels, then a **7–15 day redemption window** runs for reconciliation and coordination. After that you withdraw your collateral.
{% endstep %}
{% endstepper %}

## A worked example

|                         |                                                       |
| ----------------------- | ----------------------------------------------------- |
| You deposit             | 1 BTC                                                 |
| BTC price at deposit    | $100,000                                              |
| You claim               | **$50,000 USDC**                                      |
| Interest over 12 months | **$0**                                                |
| You repay at maturity   | **$50,000 USDC**                                      |
| Your outcome            | Determined by where BTC finishes against your strikes |

See [What Is a Collar?](file:///8003494/vault/what-is-a-collar.md) for what happens in each zone.

## What makes this different

<figure><img src="https://1150339483-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FuV0XpSBB66aR52DO5D6k%2Fuploads%2FQJZv7hE9aca6GfSGQrSY%2Fno-liquidation-comparison.svg?alt=media&amp;token=7ec3a70c-da30-4e68-bd2f-25ee1a332d12" alt=""><figcaption></figcaption></figure>

On most lending platforms a sharp drop in BTC triggers liquidation: your collateral is sold and you miss the recovery. The Monthly Vault has no liquidation mechanism, and below the put strike the collar's protection limits how far your loss can go.

The trade for that is time and upside: your BTC is committed for twelve months, and gains above the call strike are not yours.