Bitcoin is traditionally known for its store-of-value capabilities, but has finally stepped up to support decentralized finance (DeFi).
One of the most innovative Bitcoin DeFi applications is Liquidium, which enables users to lend and borrow BTC using Ordinals, Runes, and BRC-20 tokens as collateral.
In this detailed Liquidium review, we will take a closer look and see how the platform works, what types of services it offers, the standout key features, and whether it’s a worthwhile option for Bitcoin HODLers looking to earn yield or access instant liquidity.
What Is Liquidium?
Liquidium is a non-custodial, peer-to-peer Bitcoin lending app that enables users to borrow and lend BTC using Bitcoin-native assets.
Operating directly on Bitcoin’s blockchain, this Bitcoin lending platform leverages the following two features to facilitate secure, peer-to-peer lending without intermediaries:
- Discreet Log Contracts (DLCs): Discreet Log Contracts are smart contracts built on Bitcoin that allow two parties to make a bet or agreement based on an external event without revealing the contract details on-chain. They use cryptographic techniques to ensure privacy and security, with outcomes verified by an external oracle.
- Partially Signed Bitcoin Transactions (PSBTs): Partially Signed Bitcoin Transactions are a more standard format used to create Bitcoin transactions that can be signed in stages by multiple parties or devices. PSBTs are especially useful in multisig setups and hardware wallets, helping improve coordination and security in Bitcoin transactions.
What Bitcoin DeFi Services Does Liquidium Offer?
Liquidium is pioneering a new wave of decentralized finance built specifically for Bitcoin users. Unlike most DeFi platforms that operate on Ethereum or other smart contract or crypto chains, Liquidium leverages Bitcoin’s emerging technologies, like Ordinals and Runes, to enable lending, borrowing, and trading without centralized intermediaries.
Whether you are on the lookout to earn yield on your BTC or access bitcoin liquidity using your digital assets as collateral, the Liquidium app offers a range of services suitable to meet these needs.
Here are the core Bitcoin DeFi services provided by Liquidium:
1. Bitcoin Borrowing
Users can obtain BTC loans by collateralizing different Bitcoin-native assets such as Ordinals, Runes, and BRC-20 tokens. Borrowers set their desired loan terms, including amount, duration, and interest rate, which lenders can accept or counter.
2. Bitcoin Lending
Lenders can earn yields by providing BTC to borrowers. The Liquidium app offers competitive annual percentage yields (APYs), with rates reaching up to 380%, depending on demand and collateral type.
3. OTC Loans
Over-the-counter (OTC) loans allow for customized loan agreements between parties, facilitating larger or more specific lending arrangements.
4. Instant Loans
Liquidium’s Instant Loans feature enables borrowers to quickly access BTC by collateralizing Runes tokens, streamlining the borrowing process without the need for manual negotiation.
5. Runes Swaps
The platform includes a decentralized exchange (DEX) feature, allowing users to swap BTC for Runes tokens and vice versa directly within the app.
Key Features of the Bitcoin DeFi Lending App
There are many key features that stand out when using the Bitcoin DeFi Lending App. This includes the following:
1. User Experience
Liquidium offers an intuitive interface that simplifies the lending and borrowing process. Users can easily use its stunning features, such as:
- Connect compatible wallets
- Select collateral
- Set loan terms
2. Supported Assets
The platform is known for supporting Bitcoin-native assets, including:
- Ordinals: Unique digital inscriptions on individual satoshis.
- Runes: Fungible tokens built on Bitcoin’s Layer 1.
- BRC-20 Tokens: Fungible tokens utilizing the BRC-20 standard on Bitcoin.
3. Security
Liquidium employs DLCs and PSBTs to provide secure and trustless transactions. These advanced technologies allow for the creation of enforceable smart contracts and partially signed transactions, which minimize counterparty risks.
Benefits & Drawbacks of Lending Bitcoin on Liquidium
There are several benefits to take advantage of when lending BTC on Liquidium but there are also some potential risks you should know about before using the app.
Pros:
- High yields: Potential to earn high APY yield on BTC lending.
- Non-custodial: Users retain control over their assets throughout the lending process.
- Security: Utilization of DLCs and PSBTs increases transaction security.
- Asset flexibility: Ability to use various Bitcoin-native assets as collateral.
Cons:
- Smart contract risk risks: Potential vulnerabilities in the protocol’s code could lead to losses.
- Market volatility: Fluctuations in asset values can affect collateral and loan terms.
- Regulatory uncertainty: Evolving regulations may impact platform operations.
Should You Lend Bitcoin on Liquidium?
Liquidium presents a compelling option for users seeking to leverage their Bitcoin holdings without giving up ownership.
The lending platform’s non-custodial nature, high potential yields, and support for Bitcoin-native assets make it an attractive choice for both borrowers and lenders. However, users should always be aware of the inherent risks associated with DeFi platforms, such as potential smart contract vulnerabilities, a degree of regulatory uncertainty, and market volatility.
Should you decide to start borrowing or lending on Liquidium, make sure you asses the risks carefully and are comfortable with the technical aspects of how the platform works. And of course, never risk more than you can afford to lose.
