Author: Deep Tide TechFlow

On November 13, the US stock market Ethereum treasury publicly listed company BTCS (Nasdaq: BTCS) submitted its Form 10-Q quarterly report to the US SEC. The document disclosed that the company recently sold some ETH below its original cost to actively manage the collateral ratio and health factor for the Aave lending protocol.

As of November 9, BTCS had outstanding borrowings of approximately $64.1 million on the Aave platform (including accrued interest). The company deposited about 46,676 ETH as collateral, valued at the closing price of $2,127 per ETH, resulting in a fair value of the collateral of approximately $99.3 million.

On-chain Lending Leverage Cycle and Liquidation Red Line Calculation

Focusing on the business built around Ethereum staking, BTCS has long utilized a heavy asset collateral model to enhance capital efficiency. According to the US SEC EDGAR company profile, from early 2025 to November 11, 2026, the company borrowed up to $152.4 million in stablecoins via Aave.

The aforementioned borrowings concentrated on USDT and GHO, with cumulative repayments of approximately $89.4 million during the same period. Deep Tide's calculations show that the net new debt exposure during the cycle was approximately $63 million, closely matching the disclosed total debt of $64.1 million, with the difference primarily stemming from continuously accumulating interest expenses.

When the market experiences a unilateral decline, high-leverage collateral positions quickly approach the risk control line of the protocol. Referring to the official Aave risk parameter document, the regular liquidation threshold for ETH is 80%. Based on a total collateral value of $99.3 million and debt of $64.1 million, the collateral ratio is approximately 154.91%, which corresponds to a health factor of only 1.24.

If BTCS does not add margin, once ETH falls below $1,717, the health factor will drop below 1.0 and trigger a smart contract liquidation. Although the company did not disclose the specific scale of discounted sales and losses, cutting leverage during price fluctuations is a key measure to keep the position alive.

Cash Flow Exhaustion and Asset Restrictions Dilemma

In addition to the risks of on-chain protocol liquidation, BTCS's on-balance liquidity is also tight. According to US SEC EDGAR official disclosure, as of September 30, the company's cash and cash equivalents amounted to only about $463,000, which is insufficient to cover the routine operating expenses of a publicly listed company for a single quarter.

At the same time, the majority of the core digital assets measured at fair value on the balance sheet have been deposited as collateral in Aave. According to the official BTCS investor relations center, the collateral assets cannot be freely transferred or used for company operations until the borrowings are settled.

Comparing $463,000 in cash with $64.1 million in on-chain liabilities, the company's cash-to-debt coverage ratio is less than 0.73%. The structure that relies heavily on the price support of a single cryptocurrency asset has caused the public company to lose its fiat currency buffer, forcing it to passively sell core assets on the secondary market to respond to margin calls.

As of November 11, BTCS confirmed that its collateral position on Aave had not yet been forcibly liquidated. As borrowing interest is continuously accrued by block, the company's actual liquidation price line is still slowly rising, and subsequent position changes will depend on price fluctuations and the management's repayment pace.