BTC-Backed Borrowing & Lending Product
Peer-to-Pool Fixed-Rate BTC Lending
Borrowing and lending is the first product built on the LiquidSat Financing Layer.
It demonstrates how native Bitcoin collateral can be transformed into liquid capital — securely, deterministically, and without custody — using the infrastructure described in the previous section.
This product establishes the foundational credit primitive upon which future Bitcoin-native financial products can be built.
Product Scope
The LiquidSat borrowing and lending product enables:
BTC-backed credit without selling Bitcoin
Stablecoin liquidity secured by native BTC collateral
Deterministic settlement enforced by Bitcoin scripts and smart contracts
The product does not introduce new collateral models or custody assumptions. It operates entirely within the guarantees of the Financing Layer.
How the Product Uses the Financing Layer
The borrowing and lending product consumes the Financing Layer in three ways:
Collateral: BTC is locked natively on Bitcoin using script-based conditions.
Verification: The BTC lock is referenced and verified by execution-layer contracts.
Execution: Financial logic (credit issuance, repayment tracking, settlement triggers) runs on supported EVM networks.
The product does not modify or override collateral logic — it inherits it.
Lending Models Supported
To serve different liquidity needs and risk preferences, LiquidSat supports two lending models on the same infrastructure.
1. Peer-to-Pool Lending
Instant, Standardized BTC-Backed Credit
Peer-to-Pool lending aggregates stablecoin liquidity into standardized pools, allowing borrowers to access liquidity without counterparty matching.
Design intent
Enable instant access to BTC-backed liquidity
Provide predictable terms and durations
Minimize coordination and execution friction
Pools are configured with predefined parameters such as maturity and pricing, enabling immediate credit issuance once BTC collateral is verified.
This model prioritizes speed, simplicity, and consistency.
2. Peer-to-Peer Lending
Custom, Negotiated Credit
Peer-to-Peer lending enables bespoke credit agreements between participants.
Design intent
Support flexible loan structures
Enable negotiated terms and pricing
Accommodate institutional or high-value financing use cases
Participants rely on the same collateral enforcement and deterministic settlement guarantees while tailoring credit parameters to their requirements.
This model prioritizes flexibility and customization.
Unified Risk & Settlement Model
Regardless of lending model, all loans follow the same lifecycle and enforcement rules.
A single collateral lock mechanism
A shared on-chain loan registry
Deterministic settlement paths defined upfront
There is no difference in how BTC is secured, verified, or released — only how liquidity is sourced and priced.
This ensures:
Consistent security assumptions
Predictable outcomes
Reduced protocol complexity
Lifecycle at a High Level
Every loan follows the same abstract lifecycle:
BTC is locked on Bitcoin under predefined conditions
Credit is issued on an execution layer
The loan remains active until maturity
Settlement occurs deterministically:
Repayment unlocks BTC, or
Default triggers predefined settlement
Detailed flows and user interactions are covered in the Product User Journey section.
What This Product Proves
This first product demonstrates that:
Bitcoin can serve as first-class collateral without leaving Bitcoin
Credit relationships can be enforced without custody or discretion
Multiple market structures can share a single financing foundation
Borrowing and lending is not the end goal — it is the proof point.
⚡ 1️⃣ Peer-to-Pool Lending — Instant, Fixed-Rate Access
What It Is
Liquidity pools aggregate stablecoins from multiple lenders, offering instant BTC-backed borrowing at fixed rates and durations. Borrowers can tap into these pools immediately without waiting for a specific lender.
How It Works
Lenders deposit stablecoins into pre-defined pools (e.g., 7-day, 30-day, 90-day maturities).
Borrowers choose a pool and lock BTC collateral via a native Bitcoin script.
Upon verification of the lock, stablecoins are released automatically from a specific matched lender.
Borrowers repay the lender at maturity to reclaim BTC; otherwise, pre-signed transactions settle collateral among parties.
Key Features
🔄 Instant access: No back-and-forth matching delays.
💰 Fixed-rate yield: Predictable APR per pool.
🧱 Continuous liquidity: Funds are reused automatically after settlement.
🌐 Multi-network: Pools exist across supported EVM networks.
Ideal for: Users seeking quick, predictable borrowing or passive, fixed-income lending.
🤝 2️⃣ Peer-to-Peer Lending — Customized Loan Offers
What It Is
The P2P module lets borrowers and lenders negotiate custom terms — flexible durations, interest rates, or collateral ratios — directly through the protocol’s marketplace.
How It Works
Borrowers create loan requests with custom parameters (amount, duration, APR, collateral ratio).
Lenders browse available offers and accept ones matching their strategy.
Once accepted, borrower locks BTC → lender funds stablecoins on EVM.
Repayment or liquidation follows the same verifiable script-based process.
Key Features
🧾 Customizable terms: Duration, rate, collateralization, and asset type.
🧩 Direct negotiation: Optional off-chain communication or on-chain acceptance.
🔐 Non-custodial: BTC remains locked in Bitcoin script throughout.
⚖️ Transparent lifecycle: Offer → Accepted → Active → Repaid / Liquidated.
Ideal for: Institutional lenders, DAOs, or high-value borrowers seeking tailor-made agreements.
💸 Unified Risk & Yield Framework
LTV
Maximum 50 % BTC collateralization; negotiable in P2P
Interest Type
Fixed per pool; negotiable in P2P
Liquidation Trigger
Automatic when Collateral Value < LTV
Settlement
Pre-signed Bitcoin transactions; on-chain enforcement
All pools and P2P loans share the same on-chain risk engine that monitors collateral health and executes deterministic settlements.
Last updated