Liquidium DeFi Lending App Review: Features, Supported Assets, & APYs

Non-custodial crypto lending has grown significantly since the early days of DeFi. Today, billions of dollars worth of bitcoin are being borrowed and lent out on apps like Liquidium, enabling a thriving decentralized bitcoin lending market. 

This review walks you through the Liquidum lending app, its unique features, supported assets, and what kind of yield you can expect to generate on the platform.

What Is Liquidium? 

Liquidium is a non-custodial Bitcoin lending protocol that allows you to borrow BTC against assets such as Ordinals, Runes, and BRC-20 tokens. 

The platform’s most significant feature is offering borrowers the chance to secure loans with their Bitcoin-native assets as collateral, preserving ownership.

Robin Obermaier, Julian Mezger, and Peter Giammanco launched Liquidium as a way to facilitate P2P Bitcoin lending. 

The result has grown to become an innovative DeFi platform that lets you secure BTC loans using Ordinals and other Bitcoin-native assets as collateral. At the same time, HODLers have been able to enjoy yield generation by lending out their BTC.

How Does Liquidium Work? 

Liquidium operates through a straightforward process and is easy to understand. Here’s how it works:

• Collateral selection: Borrowers choose a digital asset from their wallet to use as collateral. They can select from Ordinals, Runes, and BRC-20 tokens.
• Setting loan terms: Borrowers must specify their desired loan terms, including the following details: the BTC amount they want, the Loan-to-value (LTV) ratio, the Annual percentage yield (APY), and the Loan duration.
• Collateral locking: The chosen collateral is secured in a non-custodial escrow using Discrete Log Contracts (DLCs) and Partially Signed Bitcoin Transactions (PSBTs), ensuring on-chain safety and security.
• Lender engagement: Lenders review and either accept or counter the proposed loan terms. Upon agreement, both parties sign using Partially Signed Bitcoin Transactions (PSBTs), initiating the loan.​
• Loan repayment: Borrowers repay the principal plus interest within the agreed period to retrieve their collateral. Failure to repay results in the lender claiming the collateral. ​

What are the Main Features of the Bitcoin DeFi Lending App?

Liquidium offers a range of unique features, including:

• Non-custodial, collateralized P2P Bitcoin lending: Users maintain control over their assets throughout the lending process, securely holding collateral in DLCs.
• Instant loans: The platform facilitates instant loan approvals and fund transfers by allowing borrowers and lenders to interact directly and agree on terms, enhancing user experience. ​
• Liquidium Swap: Liquidium Swap is an in-app DEX platform that lets you swap BTC to Runes tokens (and vice versa), providing users with additional flexibility in asset management.

Supported Assets On Liquidum

The Liquidium App supports several digital assets for users to choose from, including:

• Ordinal inscriptions: These are unique digital assets inscribed on individual satoshis, typically in the form of NFTs.
• Runes tokens: Advanced Bitcoin-based fungible tokens.
• BRC-20 tokens: Fungible tokens built on the Bitcoin network.

What are the Platform’s Pros and Cons?

Now, let’s look at the benefits and drawbacks of Liquidium. 

Pros

• No need to sell your Bitcoin-based assets to access BTC liquidity
• Overcollateralization approach reduces lending risk
• Features an intuitive user interface

Cons

• Limited asset support vs. Ethereum DeFi
• Lower liquidity compared to ETH protocols

Expected Yield Rates on Liquidum

On Liquidium, the platform does not fix yield rates; instead, they are determined by a dynamic, market-driven model. This creates opportunities for competitive annual percentage yields (APYs) based on supply and demand. 

Lenders can earn up to 380% APY on selected collateral.

The Future of Liquidum

The future of Liquidum looks promising, thanks to Bitcoin’s continued growth and the platform’s focus on providing holders with access to liquidity.

Aside from that, the team hopes to grow adoption and increase the total value locked (TVL). This is possible by serving more users or sticking to the plan to roll out Liquidium’s ecosystem to third-party websites via APIs, thereby letting users on those websites borrow or lend bitcoin without leaving their platforms.

Final Verdict

Liquidium provides a seamless, secure, transparent BTC borrowing and lending platform. Its integration of innovative technologies like DLCs and PSBTs ensures a non-custodial and tamper-proof process when lending and borrowing across DeFi. 

While still in its early stages and with just a few supported assets, Liquidium’s unique approach to utilizing Bitcoin-based assets as collateral positions it as a promising solution–especially for users who want to use their assets without giving up ownership. 

Reviews