Since the appearance of Bitcoin Ordinals, projects offering services related to Bitcoin NFTs have been increasing in order to expand the applications of BTC. Liquidium is one of the prominent projects representing this trend. Learn more about the Liquidium project in this article.
Table of Contents
What is Liquidium ?
Liquidium is a peer-to-peer lending platform on the Bitcoin network. Its aim is to expand the utility of BTC tokens for owners by becoming a lender to earn an annual percentage yield (APY).
For borrowers, the platform allows the use of Bitcoin NFT collections like Runestone, Ink, NodeMonkes—minted from the Ordinals protocol—as collateral for borrowing BTC.
Additionally, Liquidium continues to evolve to support other assets built from the BRC-20 standard and Runes Protocol, thereby broadening user access to capital.
Liquidium also implements two main technologies: Partially Signed Bitcoin Transaction (PSBT) and Discreet Log Contracts (DLC) to provide a transparent, decentralized lending and borrowing market. Here:
- Partially Signed Bitcoin Transaction (PSBT):
Introduced in the BIP-174 proposal, PSBT is a standard for Bitcoin transactions that facilitates the creation of multisig contracts on the Bitcoin network easily and efficiently. Its main goal is to address privacy concerns and enhance security for user assets.
- Discreet Log Contracts (DLC):
These are multisig transactions that use oracle solutions to execute smart contracts directly on the Bitcoin network. Liquidium uses DLCs to ensure safe, transparent transactions while minimizing fees for users.
Features of Liquidium
Liquidium offers users three main features: Lend, Borrow, and Portfolio.
Borrow
The Borrow function allows borrowers to take out BTC loans by depositing Bitcoin NFTs as collateral. Liquidium specifies which Bitcoin NFT collections qualify for this. Therefore, before initiating a loan, borrowers need to check if their owned assets are accepted by the protocol.
Each Bitcoin NFT collection will display specific loan terms dictated by the protocol, including:
- Offer: The loan amount available.
- Interest: The interest rate on the loan.
- Term: The duration of the loan.
- Maximum Loan to Value (LTV): The maximum percentage of the collateral’s value that can be borrowed.
- Floor: The minimum value that the collateral must maintain.
Borrowers should pay particular attention to the term associated with each collection. If a borrower fails to repay the full amount to the lender within the specified time, the loan will be liquidated, and the collateral will become the property of the lender.Additionally, to take out a loan on Liquidium, borrowers must wait for a lender to approve their loan request. According to the platform, this can take at least eight hours from the time the request is submitted. During this pending period, borrowers can still cancel their loan request if necessary.Borrowers also need to prepare a small amount of SAT tokens to cover transaction fees. Users can check the average transaction fees in the mempool at this location.
Lend
Liquidium enables BTC token holders to expand the utility of their holdings by becoming lenders through its Lend feature. Here, lenders deposit BTC tokens into lending pools from which others can borrow, earning an Annual Percentage Yield (APY).
The APY is not fixed but varies between 100% and 300%, depending on each collection.
Key Points for Lenders:
- Notifications: When a borrower makes a loan request, lenders receive notifications via email or Telegram account. Lenders must approve these requests for the loans to be executed.
- Parameters in the Lending Pool: Lenders need to be aware of several parameters within the pool:
- Loan Amount: The total amount of money available for lending.
- Interest: The rate of interest the lender will earn on the loan.
- Liquidium Fee: Platform fees, approximately 20%.
- Duration: The term length of the loan.
- Loan to Value (LTV): The percentage of the collateral’s value that can be borrowed.
- Number of Offers: The number of loan requests from borrowers.
Lenders have the flexibility to adjust two key parameters: the loan amount and the loan to value ratio.
This system provides an innovative way for BTC holders to leverage their assets for income while offering a platform for borrowers to access funds without liquidating their Bitcoin NFTs.
Portfolio
The Portfolio feature in Liquidium allows users to manage and monitor their account’s overall status effectively. This feature is designed to give users a comprehensive view of their financial activities within the platform, segmented into three main categories: Offers,Lending,Borrowing
Guide to Hunting Liquidium Airdrops
Liquidium has developed a point-earning program for its users. These points can be seen as proof, offering users the chance to receive future airdrops. The point system is calculated as follows:
- Lender: Earns 100% of the points when a loan is executed.
- Borrower: Earns 10% of the points at the start of the loan and the remaining 90% after the loan is repaid.
Here’s how to participate in the program:
Step 1: Access the Liquidium application here.
Step 2: Connect your cryptocurrency wallet to the platform. Currently, Liquidium supports two wallets: Magic Eden and Xverse.
Step 3: Select either the Borrow or Lend feature on the toolbar, depending on your needs.
Step 4: Select a Bitcoin NFT collection to use as collateral and initiate the loan process.
Step 5: Check the points earned based on your position as a lender or borrower. Users can check their points here.
What is the token of Liquidium ?
Liquidium has not yet released information about its tokenomics. Tonraffles Insights will update as soon as an announcement is made.
Investors and Project Partners
Investors
According to the project, Liquidium is backed by investment funds such as Sora Venture, Side Door Venture, Bitcoin Magazine, Bitcoin Frontier Fund, among others. Details about funding rounds or the amount of investment have not been disclosed by the project.
Partners
Liquidium has developed partnership relationships with two entities: Xverse and Deep Lake.
Projects similar to Liquidium
Some projects working on lending and borrowing within DeFi similar to Liquidium include:
Atlendis: This is a collateral-free lending and borrowing protocol built on Polygon, allowing users to become lenders by depositing money into the protocol’s liquidity pool and earning a return.
Scallop: A lending and borrowing platform on the Sui Network, providing an optimized borrowing experience for users through a Trilinear model.
