Runes Lending: How to Borrow and Lend BTC Using Runes Collateral
Jan 28, 2025
If you want to access bitcoin liquidity, you can easily borrow BTC using your Runes tokens as collateral on the Liquidium app. Moreover, if you want to lend your BTC to earn yield, you can lend them against Runes as collateral and earn up to 380% APY.
Read on to learn how you can borrow and lend bitcoin using Runes as lending collateral on Liquidium.
What Is Bitcoin Runes Lending?
Runes lending refers to lending your bitcoin (BTC) to a borrower who puts up Runes tokens as collateral for the bitcoin loan.
If the debt is paid off in time, you receive your BTC back and accrued interest. You can earn a bitcoin yield of up to 380% APY on Liquidium.
However, if the loan defaults, you get the deposited Runes collateral (which typically exceeds the amount of BTC borrowed) and can sell the tokens to offset the losses from the default.
Conversely, if you want access to short-term bitcoin liquidity (without having to buy BTC), you can post your Runes as collateral and borrow BTC quickly and easily–no paperwork required. Before the end of the duration term, you pay it back and regain access to your Runes tokens.
How to Lend Against Runes on Liquidium
If you have BTC and want to earn interest on your coins, you can lend them against Runes on Liquidium. Here’s the step-by-step process.
Choose a Runes token to lend against
First, you’ll need to choose the Runes you’ll accept as collateral, e.g. DOG•GO•TO•THE•MOON.
Keep in mind that if the debt is repaid in full within the term you set, you get your BTC back; you only get Runes if the loan defaults.
Set a lending amount
Click on the Runes token, then either set a lending amount manually by entering it into the required field, or click on a bundle to have it load everything automatically.
If you choose a bundle, you can still tweak the exact amount. Liquidium will also show you the interest rate with an automatic calculation of how much you’ll be making.
Pick an LTV
You can either opt for the automatically set loan-to-value ratio (LTV) or use the slider to move it left and right, anywhere between 0% and 100%.
A higher LTV means more interest earned but also increases your risk, so choose carefully.
Wait for a borrower
Then, the waiting game begins. Liquidium will notify you in-app once a borrower agrees to your terms.
You can also choose to be notified via email or Telegram in settings. Once you get notified, you can initiate the final step.
Approve the loan
You’ll need to approve the loan manually. Each lending transaction needs to be signed by you, the lender.
You’ll find the loan in the ‘Pending’ tab of “Portfolio” page. And that’s it!
Now, you wait for the end of the loan term to get either your BTC plus yield or receive the Runes collateral.
How to Borrow Against Runes
Borrowing against Runes is just as easy as lending and only takes a few minutes to set up.
Find and select your Runes token
The first step is finding the Runes token you own and are willing to put up as collateral.
You can either browse the list on the platform or use the search bar to navigate. You can also filter the list by volume in 1, 7, 30 days, or total volume.
Choose the Runes batch for you
When you click on the Runes token, you’ll see the batches currently available for borrowing.
Pick the batch that works for you (and that you can give the collateral for). But don’t worry, Liquidium will auto-split lots for you, if need be.
You’ll be shown other terms as well, for example, how quickly you need to repay your loan and how much interest the borrower is accruing.
Select your transaction speed
As time is money, the speed with which your transaction will be processed depends on how much you’re willing to pay for fees.
You’ll be offered options like medium and high speed, with the cost shown below, but you can also use the pencil icon in the top right corner of this part to tweak the fee to your liking.
Confirm the loan in your wallet
If there’s more than one loan offer within a 2% range of the loan amount, you can choose to accept whichever offer is signed first.
The rule here is simple: the lender who doesn’t confirm quickly enough loses out. If there’s only one offer, you can just confirm it and then wait for the lender to do their part.
Wait for approval and start the loan term
Once the lender has approved the loan from their side, the loan term starts. You can always check how long you have until you have to repay the loan on your Portfolio page under the ‘Borrowing’ option.
You can also cancel a loan request before the lender accepts it from within your portfolio's ‘Pending’ section. Once it’s broadcasted, the loan can no longer be canceled.
Once you have secured your bitcoin loan, make sure to pay it back on time so you don’t lose your Runes collateral.
Access Liquidium to Borrow and Lend BTC Using Runes Collateral
If you’re ready to start earning interest on your BTC or want to access short-term bitcoin liquidity, the lending dapp Liquidium is your best place.
On Liquidium, you can also borrow and lend against other Bitcoin L1 assets, such as Ordinals and BRC-20.
Disclaimer: This article does not constitute financial advice, and we strongly recommend conducting your own research and consulting with a professional financial advisor before making any investment decisions. We are not liable for any potential losses incurred from applying the strategies discussed. Proceed with caution and at your own risk.