Liquidium Review: Is it the Best Bitcoin DeFi Lending App?

Liquidium Review: Is it the Best Bitcoin DeFi Lending App?

Liquidium has been making waves in the Bitcoin community as one of the most popular non-custodial bitcoin lending apps. Using Bitcoin Layer 1 assets, such as Ordinals and Runes, as lending collateral borrowers can gain access to bitcoin liquidity while lenders can earn up to 380% APY on their bitcoin.  

In this Liquidium review, you will learn what this Bitcoin DeFi platform has to offer, how it works, and its pros and cons. 

What Is Liquidium?

The Liquidium app is a Bitcoin DeFi (BTCFi or BitcoinFi) lending and borrowing platform that supports Ordinals, BRC-20 and Runes tokens as collateral. It’s a non-custodial, P2P protocol that lets borrowers use these assets as collateral, and lenders earn yield on the loans they provide.

 

It was founded in 2022, first starting out as a lending protocol on the Bitcoin layer Stacks. They pivoted to Ordinals as soon as this asset class launched in 2023 and have since added BRC-20 and Runes to their offering.

How Do You Lend on Liquidium?

To lend on Liquidium, you need to connect a wallet. The protocol currently supports several wallets: Xverse, Magic Eden Wallet, UniSat, Leather, Phantom, OKX, Wizz Wallet, with Asigna stated as “coming soon.” It also states it doesn’t support hardware wallets at this time.

Once your wallet is connected, you can visit the Lend tab and choose the asset you want to accept as collateral. 

After choosing between Ordinals, Runes, and BRC-20 tokens, scroll down to find the one you want to accept. 

Click on the Lend button next to it, then choose the terms you want.

Liquidium’s Key Features

There are several key aspects of the Liquidium platform, with borrowing and lending the most important among them.

Borrowing

Liquidium lets you borrow bitcoin as long as you have either Runes, Ordinals or BRC-20 tokens to serve as collateral. You’ll need to choose one of the assets they’ve listed on their Borrow page, meaning not all Runes etc., are supported.

Lending

Lending is the other side: you can lend out BTC and earn interest in return. If the loan is paid back in time, everything’s fine. If it defaults, you’ll receive the collateral to make up for your loss.

Runes Swaps

Liquidium also lets you swap your BTC for Runes (and vice versa). This way, you can also effectively buy Runes through their platform.

Custom OTC Loans

If you need a very specific loan and aren’t happy with what’s offered on the platform, you can use the built-in Discord or Telegram channels to contact lenders and negotiate terms that work for all parties involved.

Instant Loans

Instant Loans are faster than the traditional lending process because lenders pre-fund their vaults with BTC to create live instant loan offers, giving borrowers immediate access to liquidity when they accept.

How Can You Earn Yield on Bitcoin on the Liquidium Platform?

The main way of earning yield on BTC on Liquidium is by becoming a lender. 

 

The three lending options depend on the asset type you want to accept as collateral: BRC-20, Ordinals, or Runes tokens. All three of these are based on Bitcoin, but you may be more comfortable with one over the others. 

 

If everything goes normally, you, as a lender, won’t see the collateral at all: when the borrower repays the loan, they get the collateral back. But if they fail to repay, you’ll get the collateral as repayment. For this reason, it’s important that you choose something you don’t mind getting.

 

For example, if you choose the DOG•GO•TO•THE•MOON Runes token, you’ll click on it on the list of Runes, then you’ll be shown a window where you can choose a bundle of DOG (usually ranging from $100 worth of the token to several thousand) on which you can make an offer. While the fields will autofill, you can tweak them how you want them.

 

When you’re happy with the terms and you’ve created an offer, you’ll have to wait until someone accepts that loan. You’ll be notified on the platform but also via email or Telegram if you choose that in your settings. When someone wants to borrow the amount you’ve set up for lending, you’ll confirm the loan and then just wait until repayment.

Pros & Cons of Liquidium

There are several pros and cons of using Liquidium.

Pros

• Bitcoin-oriented: For people who prefer keeping to the Bitcoin ecosystem, Liquidium only supports Bitcoin assets.

• Non-custodial: There is no centralized entity controlling the funds and, therefore, no single point of failure.

• High yield potential: Although yield amounts vary by asset, some claim up to 380% APY for lenders.

Cons

• The lending process can be pretty slow: Since it’s peer-to-peer, it relies on people interacting with each other to offer loans, accept terms, broadcast a loan, etc. All of this can take some time. 

Who is Liquidium For? 

Liquidium isn’t necessarily beginner-friendly. It’s best geared towards more experienced DeFi users, especially those who already understand how DeFi loans work and already hold Bitcoin L1 assets. 

 

Like all loans, these come with volatility risks that can lead to margin calls when the price dips below the price at loan time.

Final Verdict: Is Liquidium the Best Place to Lend?

Liquidium is an excellent place for anyone who wants to earn yield on their BTC and has a good understanding of collateralized lending and the Bitcoin L1 asset ecosystem. Since you can earn up to 380% APY on your BTC, it’s one of the highest yielding bitcoin lending apps in the market. 

 

Moreover, if you’re looking to gain access to bitcoin liquidity and don’t mind putting up your Ordinals, Runes or BRC-20 as collateral, you can get bitcoin without having to sell any assets for it.