Liquidium The first NFT lending protocol in the Bitcoin ecosystem, a solution for ordinal inscription liquidity.

Liquidium The first NFT lending protocol in the Bitcoin ecosystem, providing liquidity for non-fungible tokens (NFTs).

Author: Ordinal Labs

Translation: MetaCat

Formatting: MetaCat

Today we will take a deep dive into Liquidium, a native P2P Bitcoin Ordinals lending solution. Through this article, we will elucidate what Ordinal Inscriptions are, their unique attributes, the challenges they bring, and how Liquidium provides a solution for them.

The Emergence of Ordinal Inscriptions

Ordinal Inscriptions, also known as digital artifacts, have swept the world of digital assets. Ordinal Inscriptions are created by recording data on the smallest unit of Bitcoin (satoshis). With the support of the Bitcoin network’s Taproot upgrade, Ordinals provide new possibilities for encoding transaction data, adding more flexibility and privacy to transactions.

Although similar to non-fungible tokens (NFTs) on other blockchains like Ethereum, Ordinals have unique features that set them apart. Their uniqueness lies in being directly recorded on the Bitcoin blockchain without relying on any intermediaries or protocols. As a result, Ordinals inherit the unparalleled security and decentralization of the Bitcoin blockchain network.

Ordinals: A Closer Look

Understanding the special features of Ordinals can help us grasp their rise:

  1. Immutability and scarcity: Ordinals derive these qualities from the limited block size and limited supply in the Bitcoin network.

  2. Ordinality: Ordinals are ordered based on the sequence of their inscriptions. The lower the numerical value, the higher the reputation and value of the inscription.

  3. Data versatility: Ordinals can contain any binary encoded data, such as images, videos, texts, or even software applications.

  4. Added value: Ordinals can be inscribed on different satoshis (e.g., rare satoshis), which may increase the value of the Ordinals themselves.

Recently, a new type of Ordinal Inscription called BRC-20 has gained popularity in the market, using the principles of Ordinal Inscriptions to create fungible tokens on Bitcoin.

Liquidity Challenges Faced by Ordinals Holders

The growth in the number and value of Ordinal Inscriptions is undeniable, with some inscription works selling for millions of dollars. However, this significant growth is not without challenges. For holders of Ordinal Inscriptions, the most pressing issue is how to obtain liquidity without selling their assets. Liquidium, as a groundbreaking Bitcoin Ordinals lending solution, provides a timely answer to this problem.

The Current State of NFT Lending

NFT lending is not new. Ethereum has successfully practiced it for years. However, the massive market value of Bitcoin indicates that if a lending solution is applied to Ordinal Inscriptions, it will have a significant impact. This is where Liquidium comes in, providing much-needed lending solutions for Ordinals holders.

Liquidium Overview: Bitcoin Ordinal Lending Solution

Liquidium is a P2P lending protocol specifically designed to operate on the Bitcoin blockchain. This innovative solution allows users to lend and borrow native bitcoins using native ordinal tokens as collateral, eliminating the need for intermediaries or custodians.

The protocol offers several advantages:

  • Users can use borrowed bitcoins to purchase more ordinal tokens or any other Bitcoin network assets without the need to switch wallets, blockchains, or platforms.

  • Users do not need to map their ordinal tokens to another chain, which could involve additional risks and costs.

  • Liquidium leverages the security, scalability, and privacy of Bitcoin.

Liquidium’s MVP has been launched on Stacks and will become the first Bitcoin-native ordinal lending marketplace. This will enable Ordinal DeFi and demonstrate its growing popularity, as the Ordinal Lending Waitlist received over 15,000 submissions in less than 24 hours.

How Liquidium Works

Liquidium operates transparently and directly:

  1. Borrowers apply for loans by setting the desired loan terms and locking their ordinal tokens as collateral.

  2. Lenders review loan requests and provide bitcoins to borrowers who meet the loan criteria, initiating the loan.

  3. If borrowers fail to repay the loan on time, the loan defaults, and the ordinal tokens are transferred to the lender.

To maintain fairness and security, DeepLake Oracles verify loan outcomes by checking on-chain activities. The protocol ensures minimal trust dependency and transparent transactions.

Conclusion

With Liquidium, ordinal token holders can obtain liquidity without surrendering asset ownership. This is a significant step for NFT lending, catering specifically to ordinal token owners’ needs.

By providing a P2P lending platform that uses ordinals as collateral on the Bitcoin mainnet, Liquidium achieves true Bitcoin DeFi. This revolutionary protocol will reshape the lending landscape and create new opportunities in the world of ordinals.

For more information, please refer to the full documentation at https://liquidium.fi/.

Original article: https://ordinallabs.medium.com/liquidium-the-future-of-ordinal-lending-on-bitcoin-61f792fdd12b

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