Preon Finance Review 2026: 0% Interest Borrowing Against Crypto

Preon Finance is a decentralized lending protocol where users borrow against their crypto without paying interest. Loans are paid out in STAR, a USD-pegged stablecoin, and positions must keep a minimum collateral ratio of 110%.

The protocol is listed on Arbitrum, Polygon and Base and has been tracked since August 2023. It has its own token, PREON, and two audits are listed. Total value locked is about $225,782, which makes it a small protocol.

The project's homepage tagline is "Reach for the $STARs". The team's identity and audit firms are not stated in the material reviewed.

Preon is a collateralised debt position (CDP) protocol. A user deposits crypto into a smart contract as collateral and borrows STAR against it. STAR is a stablecoin designed to track the US dollar.

The protocol requires the value of the collateral to stay at or above 110% of the debt. If the ratio drops below that level, the position can be liquidated so the system stays backed. Because there is no interest charged, the main way a borrower loses money is liquidation or STAR trading away from its peg.

The project also references a Stability Pool. In similar CDP designs, depositors place stablecoins in a pool that is used to absorb liquidated debt, and they receive the liquidated collateral in return. Exact reward and loss mechanics for Preon should be confirmed in its documentation.

Preon's headline feature is 0% interest on STAR loans. That removes an ongoing borrowing rate, but it does not mean a loan is free of cost.

The project does not publish other charges such as one-time borrowing fees, redemption fees or liquidation penalties in the material reviewed. Users would see these in the borrow interface and the documentation before confirming a transaction. Network gas fees on Arbitrum, Polygon or Base also apply.

Two audits are listed for Preon, but the audit firms, dates and scope are not published in the material reviewed. Audits reduce but do not remove smart-contract risk, and a protocol with a small TVL has had less real-world stress testing.

The main user risks are liquidation if collateral falls toward the 110% floor, a STAR depeg, and bugs in contracts or price oracles. The project does not publish information about regulatory status or team identity in the material reviewed. Use only funds you can afford to lose and keep a wide collateral buffer.

Preon suits DeFi users who already hold crypto, want dollar liquidity without selling, and are comfortable monitoring a collateral ratio. It is a poor fit for beginners, for anyone who cannot watch positions during volatile markets, or for users who need a large and deep stablecoin market.