Three models
Custody answers who can move your Bitcoin while the loan is open.
- Custodial: a platform or qualified custodian holds the coins
- Collaborative multisig: you hold a key; no single party moves funds alone
- Non-custodial / P2P: protocol or escrow rules; the company does not hold keys
Questions to ask
Who can move the UTXO? Can you see collateral on-chain? What happens in bankruptcy?