Bitcoin Borrowing and Lending: An Overview of Liquidium

Unlock Liquidity of Your Bitcoin Assets with Liquidium

Overview

What Is Liquidium?

Liquidium is a peer-to-peer (P2P) Bitcoin lending platform that allows users to leverage their Bitcoin-based assets, such as Ordinal Inscriptions (Ordinals) and Runes, as collateral for loans. It enables borrowing and lending Bitcoin through secure and decentralized mechanisms using Partially Signed Bitcoin Transactions (PSBTs) and Discreet Log Contracts (DLCs) on the Bitcoin Layer-1 network. This approach ensures users maintain control over their assets without relying on custodial services.

How Does Liquidium Work?

Liquidium's platform facilitates a straightforward borrowing and lending process:

- Borrowing: Users can secure Bitcoin loans against their Bitcoin assets without needing to sell them, thus preserving ownership.

- Lending: Lenders provide Bitcoin to borrowers and earn yield on their holdings. Each loan involves a direct agreement between one lender and one borrower.

- Loan Terms: The terms, including the expiration date, are agreed upon by both parties beforehand. If the borrower repays on time, the collateral is returned, and the lender receives the repaid Bitcoin plus yield. In case of default, the lender keeps the collateral.

Unique Features of Liquidium

- P2P Lending: Direct agreements between borrowers and lenders ensure transparency.

- Non-Custodial: Users retain control over their assets throughout the lending process.

- Secure Transactions: Utilizes PSBTs and DLCs for secure transactions on the Bitcoin network.

- Bitcoin-Based Collateral: Supports unique Bitcoin assets like Ordinals and Runes as collateral.

Liquidium's History

Liquidium was founded in August 2022 by Robin Obermaier, Julian Mezger, and Peter Giammanco. The platform initially launched on Stacks, a Bitcoin side-chain. However, with the introduction of Bitcoin Ordinals in January 2023, the team shifted focus to the Bitcoin Layer-1 network. Liquidium's mainnet version launched in July 2022. Since then, the platform has facilitated over 2206 BTC (~ $150 million USD) in total loan volume, executed over 33,000 loans, and paid over 39 BTC (~ $2.6 million USD) in yield to lenders (as of July 24, 2024).

Liquidium Token

The LIQUIDIUM•TOKEN, introduced on July 22nd, 2024, is the first governance token on the Runes token standard on Bitcoin. This token aims to decentralize the Liquidium protocol and foster community involvement in its governance.

The Founding Team

- Robin Obermaier: Background in Design & Management.

- Julian Mezger: Background in Marketing & Management.

- Peter Giammanco: Background in Computer Science.

The founders are graduates of the Bitcoin Startup Lab and the Bitcoin Frontier Fund accelerator, making them the youngest team to do so.

Future Developments for Liquidium

Liquidium's roadmap includes several enhancements aimed at improving platform functionality and user experience:

1. Lending Liquidity Pools for Fungible Tokens:

- Implement lending pools similar to Aave on Bitcoin for tokens like RUNES and BTC.

- Enable users to lend tokens for interest and use them as collateral.

- Facilitate borrowing against lending positions.

2. Security Module for P2Pool Model:

- Develop a security module as a protection layer for the pools.

- Allow users to stake tokens in the module for yield while securing the protocol.

3. Instant P2P Loans:

- Implement instant peer-to-peer loans without lender countersignature delays.

- Improve user experience and address the issue of inactive offers in the order book.

4. Loan Extensions:

- Develop functionality for borrowers to request loan extensions.

- Allow lenders to agree to extend loans, with automatic duration and interest adjustments upon mutual agreement.

5. Decentralized Oracle for DLC:

- Create a system for multiple participants to run nodes for the oracle, enhancing security and reducing centralization.

6. Enhanced Lender Rating System:

- Implement a new rating system that includes various factors like loan rejection rate and countersignature timing.

Token Utility

The LIQUIDIUM•TOKEN serves multiple purposes within the Liquidium ecosystem. It is used for governance, allowing token holders to participate in decision-making processes. Additionally, the token can unlock premium features, provide discounts on platform fees, and earn rewards through various incentive programs.

Summary

Liquidium offers a non-custodial, secure, and efficient solution for Bitcoin lending, leveraging Bitcoin-based assets as collateral. With its foundation in innovative financial mechanisms and commitment to decentralization, Liquidium aims to drive continuous innovation within the Bitcoin DeFi space.

For those looking to utilize their Bitcoin assets without selling them, Liquidium provides a viable and secure platform to do so.