📙 The LiquidSat Financing Layer
The LiquidSat Financing Layer is a Bitcoin-native infrastructure layer that makes Bitcoin programmable for financial use without moving it off Bitcoin.
At its core, LiquidSat introduces a secure mechanism to:
Lock BTC natively on Bitcoin using scripts
Prove and reference that lock on execution layers
Enable liquidity and financial logic to operate elsewhere
Borrowing and lending is the first product built on this layer, but the layer itself is product-agnostic by design.
What “Financing Layer” Means
A financing layer defines how capital becomes usable across financial systems while preserving its security guarantees.
In the context of Bitcoin, a financing layer:
Standardizes how BTC is used as collateral
Enforces credit relationships deterministically
Allows multiple financial products to share the same risk and settlement foundation
Borrowing and lending serves as the base primitive upon which all other Bitcoin-denominated capital flows are built.
Why Borrowing & Lending Comes First
Every future Bitcoin financial use case — whether yield routing, payments, or capital markets — depends on reliable BTC-backed credit.
LiquidSat starts with the hardest problem: "Trust-minimized Bitcoin financing."
Once this foundation is proven, all other products become composable extensions of the same infrastructure.
The Core Primitive: Native BTC Lock + External Execution
Every Bitcoin financing journey starts with a single action:
Turning BTC into verifiable, non-custodial collateral — without wrapping it.
LiquidSat achieves this by separating collateral security from financial execution.
Bitcoin Layer — Native Collateral Lock
Bitcoin collateral is locked directly on Bitcoin using native Bitcoin scripts.
Dual-Layer Design
Bitcoin Layer BTC is locked in native Bitcoin scripts under pre-signed, deterministic conditions.
Execution Layer Smart contracts on supported EVM networks manage financial logic such as state tracking and settlement triggers.
Bridge-Free Communication Bitcoin lock and repayment events are verified via cryptographic proofs and state updates — no wrapped assets, no custodial bridges.
How BTC Is Locked
BTC is locked into a script-controlled output on Bitcoin.
The script defines pre-agreed spending paths, such as:
Repayment path
Expiry or default path
These paths are enforced using:
Multi-signature constraints
Pre-signed Bitcoin transactions (PSBTs)
BTC remains fully on Bitcoin, governed exclusively by Bitcoin consensus rules.
Execution Layer — Liquidity & Financial Logic
Once BTC is locked on Bitcoin, liquidity and financial logic operate on supported execution layers.
This layer is responsible for:
Referencing the BTC lock
Tracking state transitions
Executing programmable financial logic (e.g. credit, yield, settlement conditions)
Crucially:
Liquidity moves — BTC does not
Execution is programmable — collateral is not
This design allows Bitcoin to remain conservative, while financial systems remain flexible.
Bridge-Free Verification
LiquidSat never moves BTC across chains.
Instead, Bitcoin-side events are verified through:
Cryptographic proofs
Transaction references
Deterministic state updates
There are:
No wrapped BTC tokens
No cross-chain custody
No synthetic representations
Bitcoin remains the single source of truth for collateral at all times.
One Financing Layer, Many Products
Because collateral logic is fixed, reusable, and verifiable, multiple financial products can be built on top of the same infrastructure.
Examples include:
BTC-backed borrowing and lending (first product)
Structured credit products
BTC-backed payments or cash-flow instruments
Capital routing and yield strategies
Institutional financing primitives
All products share:
The same Bitcoin lock mechanism
The same settlement guarantees
The same security assumptions
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