Put your BTC and Bitcoin-native assets to work with Liquidium.WTF. Borrow against Ordinals and Runes to access liquidity without an immediate sale, or lend BTC to earn interest at quoted rates of up to 380% APY in selected Runes markets.
Read on to discover a list of DeFi lending strategies you could explore on the Liquidium.WTF app.
What Is Liquidium.WTF?
Liquidium.WTF connects BTC lenders with borrowers who pledge selected Ordinals or Runes. You choose the collateral and loan terms before signing.
Borrow BTC while keeping exposure to your Ordinal or Rune. Your collateral stays in escrow during the loan, and you reclaim it when you repay.
DeFi Lending Strategies on Liquidium.WTF
Liquidium.WTF offers two principal methods to use your Bitcoin assets: borrowing and lending. Each comes with its own tactics based on your investment objectives, risk appetite, and/or market situation.
So let’s take a look at some of the most exciting Bitcoin DeFi lending strategies you can deploy on Liquidium.WTF.
Bitcoin Borrowing Strategies
Borrow against your Ordinals or Runes to fund another purchase while keeping your existing position. Plan the repayment before adding exposure: leverage increases both potential gains and losses.
You can use these borrowing strategies on Liquidium.WTF:
Leverage Your Position
Let’s say you’re bullish on the Ordinal Maxi Biz (OMB) collection. You’re currently holding 0.2 BTC and want to increase your exposure to OMB. This is how you could leverage your position:
- Start small: Purchase one OMB using a portion of your BTC.
- Borrow against it: Use that OMB as collateral to borrow additional BTC.
- Use the borrowed BTC toward another OMB. If you borrow against that OMB too, size the additional loan around the BTC you can repay, including interest and fees. Match the loan duration to your trading plan.
- Set yourself a target: Keep the cycle going until you’ve reached your target. For example, this could be when you hit 5 OMB.
- To exit, repay the loan and reclaim your collateral before selling it. Keep the repayment funds available for that step.
Essentially, this method lets you grow your gains by leveraging the possibility of using borrowed funds to buy more of the asset you need and then once again borrow against it. However, keep in mind that that notoriously volatile market can also move against you, so be careful.
Use Your Assets to Buy More Assets
Sometimes, an opportunity shows up in the form of a new Runes token or a fresh Ordinals collection. With Liquidium.WTF, you don’t have to choose between holding your assets and seizing new opportunities. Instead, you can do this:
- Use your Bitcoin-powered assets, such as Ordinals as collateral.
- Borrow BTC against your collateral to fund the purchase of the new asset you’re eyeing.
- Purchase the new assets without selling the existing ones.
This strategy can be great for investors who want to have a degree of flexibility to keep up with a rapidly evolving market. By borrowing against the assets you’re already holding, you’ll have more capital to explore new projects without liquidating your current assets.
Hedge Your Positions
A fixed-term BTC loan can act as a hedge on an asset you hold: you receive BTC upfront and decide whether reclaiming the collateral is worth the repayment cost. Factor in the interest, fees, and collateral you would give up on default.
- High loan-to-value (LTV) borrowing: On Liquidium.WTF, when you borrow against your assets at a high LTV (Loan-to-value ratio), your downside risk is mitigated in case the collateral’s price drops below the loan amount.
For example, you borrow 80% of an OMB, which is worth 0.5BTC. So, you have 0.4BTC now. When you need to repay the loan, the price drops to 0.3BTC. In this scenario, you can keep the borrowed money and just default.
Liquidium.WTF doesn’t use LTV-based liquidations, and your loan depends on whether you're able to repay it in time.
- Default outcome: You keep the borrowed BTC and the lender can claim the pledged collateral. Include that trade-off when comparing repayment with default.
Hedging your positions is particularly useful if you believe that your Bitcoin L1 assets might drop against BTC and you want to use this opportunity to get more BTC. It also lets you hold onto your holdings while freeing you to engage with other assets at the same time.
Bitcoin Lending Strategies
Indeed, the above borrowing strategies entail some exciting ways to unlock the potential of your Bitcoin assets. That said, offering BTC loans to other users through Liquidium.WTF allows you to earn yield or even acquire assets at favorable prices.
Let’s find out how:
Grow Your BTC
If you’re looking to steadily grow your BTC holdings, lending could be one of the strategies to do so. Before you lend your BTC on Liquidium.WTF, there are some things to keep in mind:
- Collateral buffer: Set a lower LTV to lend less BTC relative to the collateral’s current value. This gives your loan more room for price movement, although collateral prices can still fall.
- Earn interest: As soon as the borrower repays the loan, you get interest on your bitcoin. As time goes by, this interest might add up, growing your BTC hoard without active trading or investing.
Doing this can give you a chance to boost your long-term BTC holdings.
Cheap Buy In
Lend against an Ordinal or Rune you would be willing to own. Set the BTC amount around your valuation of the collateral, then earn interest on repayment or claim the asset on default.
Liquidium.WTF can make this particular wish come true. Through its lending platform, you can make strategic loan offers that could result in a cheap buy-in in case the borrower defaults.
- Choose an asset you would be happy to own and set your loan amount around that valuation. At 50% LTV, you lend half the collateral’s current market value.
- Set your offer below the collateral’s current market value to build in a price buffer. Reassess liquidity and price before lending because the asset’s value can change during the loan.
It’s a creative, flexible, and potentially profitable way to take part in the market without actively buying or selling BTC and Bitcoin-powered assets.
If the borrower repays, you receive BTC principal and interest after fees. If they default, you can claim the collateral and decide whether to hold or sell it.
The Takeaway
With its innovative approach to DeFi lending, Liquidium.WTF offers plenty of opportunities for you to explore advanced lending strategies.
Choose the strategy that fits your position: borrow against assets you want to keep, or lend BTC against collateral you want exposure to. Liquidium.WTF gives you control over the asset and the loan terms.
Start with the assets and loan size that fit your goals. Keep a repayment plan for borrowed BTC, and choose collateral you would be comfortable owning as a lender.
Connect your wallet to Liquidium.WTF to start growing your Bitcoin asset portfolio.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making any financial decisions.
FAQs
Which app can I use to borrow bitcoin?
Open Liquidium.WTF’s Bitcoin app, connect your wallet, and choose Borrow. Select your Ordinal collection or Rune to see available offers and start a loan.
What is DeFi lending in crypto?
DeFi lending in crypto is a decentralized financial service that enables users to lend or borrow cryptoassets without reliance on traditional banks or other centralized institutions. Some DeFi platforms, like Liquidium.WTF, support BTC and Bitcoin-powered asset DeFi lending, opening new revenue opportunities for you.
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