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Liquidium: A P2P Ordinal Lending Solution




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LIQUIDIUM: A P2P ORDINAL LENDING SOLUTION




INTRODUCTION


Liquidium is a groundbreaking solution for Ordinal lending on Bitcoin that
leverages the power of Discreet Log Contracts (DLCs) and Partially Signed
Bitcoin Transactions (PSBTs) by partnering with DeepLake. Unlike existing
protocols that rely on bridging Ordinals to other blockchains, Liquidium allows
users to borrow and lend native Bitcoin against native Ordinals as collateral in
a trust-minimal and custodian-free solution.



THE RISE OF ORDINALS


Ordinal Inscriptions are a new form of digital assets created by inscribing data
on satoshis, the smallest unit of Bitcoin (BTC). The Taproot upgrade on the
Bitcoin Network enabled new ways of encoding Bitcoin transaction data, allowing
for more flexibility and privacy. Thanks to this upgrade, Ordinal Inscriptions
were possible.

Ordinal Inscriptions are similar to NFTs (non-fungible tokens) on other
blockchains such as Ethereum. NFTs are unique and indivisible digital tokens
representing ownership of various digital or physical assets, such as art,
music, games, collectibles, etc. Nonetheless, Ordinal Inscriptions have
distinctive features that differentiate them from NFTs.

First, Ordinal Inscriptions inscribe data directly on the Bitcoin blockchain
without relying on any intermediary layer or protocol. Therefore, inscriptions
inherit the security and decentralization of the Bitcoin network, considered the
most robust and resilient blockchain. This results in Ordinals being immutable
and scarce by nature because of Bitcoin's limited block size and limited supply.

Second, Ordinal Inscriptions are ordered by when they were inscribed. The first
Ordinal Inscription was index #1, the second index #2, and so on. This creates a
natural scarcity and rarity for Ordinal Inscriptions based on their ordinality.
The lower the index number, the more valuable and prestigious an Ordinal
Inscription is likely to be.

Third, Ordinal Inscriptions can contain any data encoded in binary format. This
includes images, videos, text, audio files, software applications, and more.
With all of these unique characteristics, Ordinals are gaining demand from users
across all blockchains.

Fourth, Ordinal Inscriptions can be inscribed on to different Satoshis, hence
increase the value of the Ordinal itself. Sats are defined as as follow.

ALT


Recently, a new type of Ordinal Inscription has joined the market called BRC-20,
which allows for Fungible Tokens on Bitcoin using the principle of Ordinal
Inscriptions.

More than 10 million Ordinals have been inscribed since February 2023.

ALT

ALT



THE CHALLENGE OF ACCESSING LIQUIDITY FOR ORDINAL OWNERS


Ordinals continue to grow in volume and value, with some pieces selling for
millions of dollars. However, Ordinal owners face a significant challenge: how
can they access liquidity without selling their precious assets? Fortunately,
Liquidium provides a groundbreaking solution for Ordinal lending on Bitcoin.
Ordinal lending locks inscriptions as collateral to borrow Bitcoin, or other
cryptocurrencies, while retaining ownership and exposure to their Ordinal.



THE CURRENT STATE OF NFT LENDING


NFT lending is a proven concept. It has been successfully implemented on
Ethereum for several years. In fact, NFT lending has a total borrow volume of
just about $2Bn on only Ethereum-based NFT lending platforms.

Recently, there has been a surge in NFT lending due to more big NFT companies
joining the space, such as Blur.io with their Blend P2P NFT lending platform and
most recently even Binance with a P2Pool NFT Lending protocol. The biggest NFT
Companies are onboarding NFT lending solutions due to its massive demand.

Ethereum NFTs account for the majority of the volume and value in the NFT space
across all blockchains - mostly because Ethereum is the largest NFT-capable
network by market cap. Given that Bitcoin has a larger market cap than Ethereum,
this gives reason to believe Ordinals will have a significant role and impact.
Therefore, a lending solution enabling Ordinal owners to lock inscriptions as
collateral is needed.

ALT



LIQUIDIUM: THE SOLUTION FOR ORDINAL LENDING ON BITCOIN


Our protocol enables users to access liquidity quickly, cheaply, and securely
while retaining full control over their assets. Liquidium is not another
workaround. Our novel and innovative solution operates solely on the Bitcoin
blockchain in a secure and transparent peer-to-peer manner for lending and
borrowing digital assets.

Unlike existing solutions that rely on bridging Ordinals to other blockchains,
Liquidium allows users to borrow and lend native Bitcoin using their native
Ordinals as collateral without intermediaries or custodians. This has several
advantages over current workarounds:

Users can use their borrowed Bitcoin to buy more Ordinals or any other asset on
the Bitcoin network without switching between different wallets, blockchains, or
platforms.

Users do not have to wrap their Ordinals to another chain, which introduces
additional risks and fees. Liquidium uses DLCs to create trustless contracts
between borrowers and lenders enforced by oracle signatures.

Users can benefit from Bitcoin's security, scalability, and privacy, as
Liquidium uses PSBTs to create flexible and composable transactions that
multiple parties can sign.

Liquidium already launched an NFT lending protocol on Stacks as an MVP and is
about to be the first Ordinal lending marketplace on native Bitcoin, enabling
Ordinal DeFi. Our MVP facilitated over 67 loans and $20k in borrow volume and
our current waitlist for Ordinal Lending gained more than 15k submissions in
less than 24 hours.



TERMS


Borrower - An ordinal inscription holder looking to collateralize their
inscriptions in a loan.

Lender - A BTC holder looking to earn yield on their BTC or receive a discounted
Inscription in the scenario of a loan default.

Loan Request - A loan with a set amount, duration, interest rate set, and signed
PSBT by the Borrower.

Collection Offer - A loan offer created by a lender on an entire ordinal
collection. Borrowers can accept these offers to initiate a loan.

Loan Default - The event when a loan is not paid back in time



HOW IT WORKS


Outdated! Find the new docs here: https://docs.liquidium.fi


ENGLISH



CHINESE




CONCLUSION


Ordinals, a new form of digital assets created by inscribing data on satoshis
(smallest unit of Bitcoin), are revolutionizing the digital asset landscape.
These unique and scarce tokens, enabled by the Taproot upgrade, are similar to
NFTs but have distinct advantages, such as being directly inscribed on the
Bitcoin blockchain and inheriting its security and decentralization.

Liquidium has arrived at the perfect moment to fill a significant gap in the
market by offering a revolutionary Ordinal lending solution on Bitcoin. By
leveraging the unparalleled security and decentralization of the Bitcoin
network, Liquidium provides a trust-minimized and custodian-free platform for
accessing liquidity.

As the natural next step in the evolution of NFT lending, Liquidium is leading
the charge with a solution that caters specifically to the needs of Ordinal
owners. By offering a P2P Bitcoin lending platform that uses Ordinals as
collateral on Layer 1 Bitcoin, Liquidium enables true Bitcoin DeFi and Ordinal
DeFi. It eliminates the need for cumbersome and expensive workarounds while
taking advantage of the robust and resilient Bitcoin infrastructure.

With our extensive experience and traction, including our MVP and our waitlist
of more than 16.5k submissions, we're the right ones to enable true Ordinal
Lending & DeFi. Let’s redefine the lending landscape and provide much-needed
access to liquidity for the rapidly growing world of Ordinals.



LINKS


Website: https://liquidium.fi

Liquidium Documentation: P2P Ordinal Lending (outdated)

Liquidium Resources - Ordinal Lending & DeFi