A cross-chain loan is a crypto loan where the collateral sits on one blockchain and the borrowed asset is paid out on another. A typical example: you lock native bitcoin on the Bitcoin network and receive USDC at an Ethereum address. The loan is overcollateralized, accrues interest, and can be liquidated if the collateral loses too much value.

TL;DR

A cross-chain loan connects two networks in one position: collateral on chain A, debt delivered on chain B.
Most "cross-chain" borrowing in DeFi still means bridging or wrapping your asset first (for example, BTC into WBTC on Ethereum), then borrowing on a single-chain protocol.
Liquidium runs its lending logic on the Internet Computer (ICP). You send native BTC from a Bitcoin wallet and receive stablecoins on Ethereum, without using a bridge and without holding a wrapped token yourself.
As of November 2026, Liquidium's docs list BTC at a 65% max loan-to-value (LTV) and a 74% liquidation threshold.
The main risks are liquidation, smart-contract (canister) risk, oracle and infrastructure risk, and governance risk.

How does a cross-chain loan work?

Every cross-chain loan has to solve the same problem. Blockchains cannot read each other's state, so something has to confirm that your collateral arrived on one chain before releasing funds on another, and it has to be able to move that collateral if the loan goes bad.

The generic flow looks like this:

Deposit collateral on the source chain, such as BTC on Bitcoin.
The protocol confirms the deposit after enough block confirmations.
The protocol records your debt and checks that your collateral value covers it with a safety margin.
The borrowed asset is sent to your address on the destination chain, such as USDC on Ethereum.
You repay the debt plus interest whenever you choose. The protocol then releases your collateral.
If the collateral value falls below a set threshold, a liquidator repays part of the debt and receives collateral at a discount.

The interesting part is steps 2 and 4: who or what holds the collateral, and who signs the transaction on the other chain. That is where designs differ, and where most of the risk lives.

How Liquidium handles it: chain-key custody on ICP

Liquidium's lending protocol runs as canisters (smart contracts) on the Internet Computer. ICP's chain-key technology lets canisters hold assets on Bitcoin and Ethereum and sign transactions with threshold cryptography, where a signing key is split across the nodes of an ICP subnet and no single party holds the full key (Liquidium docs: cross-chain architecture).

In practice, a BTC-collateral loan works like this:

You send native BTC from your own Bitcoin wallet to a deposit address shown in the app.
After 4 Bitcoin confirmations (roughly 40 minutes, per the docs), ICP's chain-key infrastructure mints ckBTC, a token on ICP backed 1:1 by that BTC, and the BTC pool credits your position.
The lending canister checks your collateral against the pool's max LTV, records the debt, and sends the stablecoin to your Ethereum address.
When you repay in full, your BTC is returned to your Bitcoin address.

You never handle ckBTC, a bridge interface, or a wrapped token. The chain-key asset is the protocol's internal accounting unit. According to Liquidium's docs, the Bitcoin backing it is held at addresses controlled by threshold ECDSA, and no Liquidium team member holds a private key to those funds (Security, governance & risk).

One practical consequence: because collateral and debt sit on ICP as chain-key assets, liquidations settle on ICP in seconds and do not wait for Bitcoin's roughly 10-minute blocks (Core concepts).

For a product walkthrough of supported chains and routes, see Liquidium cross-chain lending.

How is a cross-chain loan different from bridged or wrapped-token lending?

The common alternative is to convert BTC into a wrapped token first. WBTC, for example, is an ERC-20 token on Ethereum backed by BTC held by custodians. In August 2024, BitGo announced a move to a multi-jurisdiction custody arrangement with BiT Global, phased in over the following weeks. Once you hold WBTC, you can supply it to a single-chain lender such as Aave and borrow stablecoins there.

That route works, but it changes what you are trusting. Your collateral is no longer bitcoin; it is a claim on a custodian's reserves. Minting and redeeming WBTC goes through approved merchants. And if you use a third-party bridge instead of a custodian, you add a bridge contract to the chain of trust. Bridges have been a frequent target: Chainalysis estimated in August 2022 that about $2 billion had been stolen across 13 cross-chain bridge hacks, most of it in 2022, including the roughly $625 million Ronin bridge exploit.

Centralized lenders take a third approach. You send BTC to a company, which holds it and lends you cash or stablecoins. The terms can be simple, but your collateral depends on that company's solvency and policies. When Celsius filed for Chapter 11 in July 2022, customer withdrawals had already been paused for a month, and customer claims went through the bankruptcy process.

	Native cross-chain loan (Liquidium)	Wrapped-token DeFi loan (e.g. WBTC on Aave)	Centralized lender
What you deposit	Native BTC from your Bitcoin wallet	WBTC, after wrapping or buying it	BTC sent to the company
Who holds the collateral	Protocol canisters via threshold signatures	Smart contract holds WBTC; custodians hold the underlying BTC	The company
Extra steps before borrowing	None; send BTC to a deposit address	Wrap or bridge, then switch to the lending app	Account sign-up, often KYC
Where you receive funds	A supported address on another chain, e.g. USDC on Ethereum	Same chain as the lending protocol	Bank account or exchange wallet
Main trust assumptions	Liquidium canisters, ICP chain-key infrastructure, the governance multisig	Lending contract, WBTC custodians and merchants, any bridge used	The company's solvency and policies
Liquidation	On-chain, by public liquidators	On-chain, by public liquidators	Set by the company's terms

For a deeper comparison of bridges, wrapped tokens, and custodial lenders, read Bitcoin loan technology compared or Liquidium vs Aave.

What are the risks of a cross-chain loan?

Removing a bridge removes one category of risk. It does not make borrowing against a volatile asset safe. Liquidium's docs list these as the main risks (Security, governance & risk).

Liquidation risk

If BTC falls far enough, your position becomes liquidatable. On Liquidium, that happens as soon as your Health Factor drops below 1.0. There is no margin call or grace period. A liquidator can then repay up to 50% of the debt and receive collateral worth that amount plus a 5% bonus for BTC. If the Health Factor falls to 0.975 or lower, up to 100% of the debt can be repaid in one liquidation (Liquidations).

Smart-contract and canister risk

Bugs in Liquidium's canisters, or in a future upgrade, could cause losses. Trail of Bits reviewed Liquidium's ICP canisters and reported 25 findings, of which 24 are resolved and one is informational. The lending canister code is not open source.

Oracle risk

Collateral and debt are valued with prices from ICP's Exchange Rate Canister, which is governed by ICP's NNS, not a Liquidium server. Prices refresh every 30 seconds. If a needed price is older than 120 seconds, borrows, withdrawals, and liquidations are paused until a fresh price arrives (Health factor). A wrong or delayed price can still trigger or delay a liquidation.

Infrastructure and governance risk

Liquidium depends on the Internet Computer, its chain-key minters, and the Exchange Rate Canister. Canister upgrades and risk settings go through an Orbit multisig with team and external signers. That multisig can freeze a pool or change parameters such as the liquidation threshold, and a lower threshold can make a previously safe position liquidatable.

Liquidity and rate risk

Borrow rates are variable and rise with pool utilization. If most of a pool is borrowed, withdrawals from it may wait until borrowers repay or new supply arrives.

Worked example: borrowing USDC against 1 BTC

This example uses Liquidium's BTC parameters as published in the docs on November 6, 2026: 65% max LTV, 74% liquidation threshold, 5% liquidation bonus, plus a 0.5% activation fee added to the debt (Health factor docs, FAQ). Live values are on the app's Insights page and can change. BTC traded around $75,600 on November 6, 2026; the example rounds to $75,000.

Opening the loan

Collateral: 1 BTC, worth $75,000
Borrowed: 30,000 USDC, sent to your Ethereum address
Activation fee: 0.5% × 30,000 = 150 USDC, added to the debt
Starting debt: 30,150 USDC
Starting LTV: 30,150 ÷ 75,000 = 40.2%

Where liquidation starts

The position becomes liquidatable when the debt reaches 74% of the collateral value:

Liquidation price = debt ÷ (BTC amount × liquidation threshold)
30,150 ÷ (1 × 0.74) = about $40,743 per BTC

BTC would have to fall about 45.7% from $75,000 before this loan could be liquidated. In decimal terms the starting Health Factor is (75,000 × 0.74) ÷ 30,150 = 1.84, which the app shows as roughly 46% Health.

Interest accrues on the 30,150 USDC over time, so the liquidation price drifts upward the longer the loan stays open.

Borrowing closer to the limit

Simple Loans keep at least a 2-percentage-point buffer below max LTV, so the most you could open against 1 BTC is about 63% LTV, or 47,250 USDC of debt. That moves the liquidation price to 47,250 ÷ 0.74 = about $63,851, only a 14.9% drop away. Same collateral, much less room.

If liquidation happens

Say BTC touches $40,743 in the first example and the Health Factor dips just under 1.0. A liquidator can repay up to 50% of the debt, 15,075 USDC. In return, 15,075 × 1.05 = $15,828.75 of your BTC is seized, about 0.3885 BTC. The liquidator receives $15,791.06 of it and the protocol keeps $37.69, which is its 5% cut of the bonus (Liquidations). You still have the 30,000 USDC you originally borrowed, your debt falls to 15,075 USDC, and you are left with about 0.6115 BTC of collateral. The $753.75 bonus is the direct cost of being liquidated.

To model your own numbers, use the crypto loan calculator. To see what borrowing against BTC looks like end to end, read Bitcoin-backed loans on Liquidium.

Try a cross-chain loan

If you want liquidity without selling your bitcoin, you can borrow stablecoins against native BTC on Liquidium Borrow. Start with a size that leaves a wide buffer above your liquidation price, and keep an eye on it when markets move.

For step-by-step instructions, see the Simple Loan guide or our walkthrough on cross-chain crypto lending with BTC collateral.

FAQ's

Is a cross-chain loan the same as using a bridge?

No. A bridge moves an asset from one chain to another. A cross-chain loan keeps your collateral locked as security and sends you a different asset on another chain. Some cross-chain lending setups still rely on bridges internally; Liquidium uses ICP's chain-key signatures instead.

Do I need wrapped bitcoin to get a cross-chain loan on Liquidium?

No. You send native BTC from a Bitcoin wallet. Internally, the protocol represents it as ckBTC, a 1:1 backed chain-key token on ICP, but you never hold or manage it. Users who already hold ckBTC can also deposit it directly over ICP.

How much can I borrow against BTC?

As of November 2026, Liquidium's docs list a 65% max LTV for BTC. Simple Loans keep at least a 2-percentage-point buffer below that, so 1 BTC worth $75,000 supports up to about $47,250 of debt (63% LTV), including the 0.5% activation fee. Borrowing less than the maximum lowers your liquidation price. Check the app's Insights page for live values.

What happens if BTC drops?

Your LTV rises. Once it crosses the 74% liquidation threshold (Health Factor below 1.0), a liquidator can repay part of your debt and take BTC worth that amount plus a 5% bonus. You can avoid this by repaying debt or adding collateral before the threshold is reached.

Which chains does Liquidium support for cross-chain loans?

As of November 2026: Bitcoin mainnet (BTC), Ethereum mainnet (ETH, USDC, USDT), and the Internet Computer (ICP, plus ckBTC, ckETH, ckUSDC, and ckUSDT). Solana is listed as coming soon.

Is there a fixed repayment date?

No. Liquidium loans have no monthly payments or term. Interest accrues at a variable rate, and you can repay part or all of the debt whenever you want, as long as the position stays above the liquidation threshold.

Do I need an account?

Not for a Simple Loan. You choose the assets, enter a refund address and a destination address, and send collateral to the supply address shown. Signing in with a wallet or Internet Identity is optional and lets you sync loans across devices.

Sources

Liquidium (checked November 6, 2026):

External:

ICP threshold ECDSA
ICP Bitcoin integration and ckBTC
WBTC custody move to BitGo and BiT Global (Cointelegraph)
Chainalysis bridge-hack estimate, August 2022
BitGo WBTC custody announcement, August 2024
Celsius Chapter 11 filing, July 2022 (The Block)
BTC price on November 6, 2026: CoinGecko and mempool.space price APIs (~$75,555–$75,602)

What Is a Cross-Chain Loan? How It Works, Risks, and an Example