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Bitcoin Lending Platform Liquidium Secures $1.25 Million In Funding

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The pioneering Bitcoin lending platform Liquidium has raised $1.25 million in a pre-seed funding round to further develop its innovative solutions that allow the use of non-fungible tokens called Ordinals as collateral for loans denominated in Bitcoin.

The successful funding round highlights the increasing mainstream traction and demand for crypto-native financial services that expand Bitcoin’s usefulness beyond payments. With backing from leading crypto venture funds like Bitcoin Frontier Fund and Sora Ventures, Liquidium aims to establish itself as the leading fair and accessible on-chain lending market on Bitcoin.

Collateralizing Rare Digital Art for Bitcoin Lending

Liquidium utilizes technical protocols like Partially Signed Bitcoin Transactions and Discreet Log Contracts that allow the use of Ordinals – Bitcoin’s version of NFTs – as loan collateral while avoiding the need for smart contracts. Since the Ordinals represent ownership of rare digital art and other collectibles, this unlocks their latent financial utility.

By enabling lending against these illiquid assets, Liquidium creates earning opportunities for lenders while allowing borrowers to access liquidity without selling their cherished NFT possessions. Since its launch in July 2022, Liquidium has already facilitated over 300 loans worth upwards of $870,000 in volume.

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Source: Liquidium

Having established an impressive track record in closed beta, Liquidium has now opened access to everyone by shifting to open beta. The platform is working on expanding support to fungible tokens on Bitcoin as additional collateral options.

“Bitcoin opened an era of fair, non-custodial, accessible transactions. Until recently it was limited to basic payments. At Liquidium, we took this vision further and created the leading fair, non-custodial, and accessible lending market on Bitcoin, the most secure blockchain in existence,” said Robin Obermaier, CEO and Co-Founder.

Validation Of Liquidium’s Vision

The successful funding round validates Liquidium’s potential to bring innovation to Bitcoin lending markets. With backing from savvy crypto investors, Liquidium is strategically positioned to increase the adoption of Ordinals and expand Bitcoin’s utility.

“I truly appreciate the opportunity Liquidium has provided me. I wouldn’t have the collection I have today without this platform,” said Borrower of Liquidium, who acquired Ordinals with the help of Liquidium.

As Liquidium executes on its vision with continued product development, it could reshape how lending and borrowing work in the Bitcoin ecosystem – bringing maturity and diversity similar to traditional finance.

Related Reading | Coinbase Seems to Be the 1st Ever Bitcoin Lending Acquirer From Goldman Sachs

Wintermute’s $96M Debt Pay-Off Despite Hack

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US-based crypto market-maker firm Wintermute has managed to fulfill its debt obligations by repaying $96 million USDT on DeFi lending platform TrueFi.

According to the TrueFi dashboard, the uncollateralized loan was repaid on October 14, one day before its due date. One of the largest loans made on TrueFi’s platform, Wintermute’s initial loan from the DeFi lender was made in April.

Speaking on the same, CEO Evgeny Gaevoy said the move reflects Wintermute’s healthy liquidity position which he claims is still “going strong”.

For the record, the top crypto trading platform offers liquidity on more than 50 exchanges and trading platforms, including decentralized mainstays Dydx and Uniswap as well as Binance, Coinbase, FTX, and Kraken.

It also invests actively, having supported businesses including Nomad, HashFlow, and Ondo Finance.

Moreover, a $160 million hack on September 20 did not hinder Wintermute’s capacity to pay its bills, TronWeekly reported the other day.

As the platform processes thousands of market-making transactions every day, the hack occurred as a result of an access vulnerability related to a “vanity address” on an account Wintermute utilized to save gas expenses.

Bug That Targeted Wintermute Is Still On The Loose

Wintermute’s founder Gaevoy, said in a series of tweets that the company’s decentralized finance operations had been compromised, but that over-the-counter and centralized financial verticals were unaffected.

On-chain security experts pointed out a bug in a wallet tool called Profanity as the main culprit.

One of the most widely used methods for creating wallet addresses in the past, the project was abandoned because of serious security issues.

The same bug also recently affected the decentralized exchange aggregator ParaSwap whose deployer address fell prey to the Profanity vulnerability.

But thanks to the knowledge of the bug, Blockchain security infrastructure firm BlockSec has been able to help ParaSwap in recovering the lost funds.

Although Profanity is well known for being a useful tool for creating addresses, the creator of Profanity warned on Github that wallet security is extremely crucial, “The code will not receive any updates, and I’ve left it in an uncompilable state,” the developer wrote. “Use something else!”

Bitcoin Price Slump Lead to Miners’ Loan Piling Up By $4B

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The extended price downturn of the world’s leading crypto asset Bitcoin has made miners’ life particularly difficult. Per Bloomberg’s report, rig owners are neck-deep in loans ranging up to a staggering $4 billion.

A growing number of loans are now underwater, according to analysts, as many of the mining rigs lenders accepted as collateral have now halved in value along with the price of the world’s largest digital token.

So far, only a handful of miners have defaulted on their loans, but many others have resorted to dumping BTC. For instance, one such firm- Core Scientific sold more than 2,000 Bitcoin in the month of May to help recover operational costs.

Similarly, Bitfarms offloaded nearly half of its mined tokens in early June to repay part of its US$100 million loans with Galaxy Digital Holdings. It also took out another machine-backed loan from New York Digital Investment Group.

Experts stressed the situation might worsen if the market doesn’t improve. Let’s see how.

Selling Bitcoin Reserves Puts Further Pressure On Prices

Market observers feel selling BTC reserves puts strain on prices, and lowers equipment prices which are at risk of liquidation for lenders – looking to retrieve their losses on defaults.

“Bitcoin miners, broadly speaking, are feeling pain,” said Luka Jankovic, head of lending at Galaxy Digital. “A lot of operations have become net IRR negative at these levels. Machine values have plummeted and are still in price discovery mode, which is compounded by volatile energy prices and limited supply for rack space.”

The mining business was considered one of the most lucrative where margins were high as 90%. Leading crypto lending platforms such as Galaxy Digital, BlockFi, Celsius Network, and Babel Finance accepted mining rigs as collateral in exchange for down payments.

But now those lenders could be significantly undercollateralized, said Ethan Vera, co-founder of Seattle-based mining company Luxor Technologies. “They are nervous about their loan books, especially those with high collateral ratios.”

Even though a majority of Bitcoin miners rake up decent profit margins. “But the reduced income still impacts their business as some of them have loans to repay and collateral to post for their machine purchases,” Jaran Mellerud, a mining analyst at Arcane Crypto stated.

Santander Launches Loans Backed by Agriculture Commodities-Based Tokens

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Santander, a multinational Spanish bank, has announced that it will issue loans in Argentina secured by agricultural commodities-based cryptocurrency.

Santander has teamed with Agrotoken to provide these loans to the agriculture sector. The Ethereum, Algorand, and Polygon networks will be used to build the infrastructure.

How does Santander’s new collaboration work?

Each token will represent a ton of grain that has been stored. SOYA will stand for soy, CORA will stand for corn, and WHEA will stand for wheat. According to Reuters, Argentina’s inflation hit a nine-month high in January. The commodity’s price will determine the new tokens’ value in US dollars.

Farmers may save these tokens in their digital wallets, available on both PC and mobile devices. They may also trade them for crops, automobiles, machinery, gasoline, services, and other items. They may now use them as a kind of collateral for loans.

Every ton is verified via a PoGR (“Proof of Grain Reserve”) network. PoGR is marketed as a decentralized, transparent, and secure system. It has a multichain infrastructure that makes use of several networks technologies.

Argentina will be the testbed for the experimental project, totaling $225 million. Ana Botn, President of the Santander Group, announced the investment at the end of 2021 but did not say what it was for.

Fernando Bautista, Santander Argentina’s Head of Agribusiness, said the technology reveals new prospects in the agriculture industry.

“We rely on technology and creativity to develop innovative business solutions that make life simpler for agricultural farmers and broaden their potential.”

Eduardo Novillo Astrada, co-founder and CEO of Agrotoken, added his two cents:

“This is the first time in the world that agricultural commodities such as soybeans, corn, and wheat have been used to back loans.”

They said that blockchain technology would improve the efficiency of agricultural produce storage. It’s also the first time crypto assets based on farm products have been guaranteed.

This decision indeed is an excellent initiative by Santander, which will help out many farmers. Implementing blockchain technology is one way to ease and fasten up various processes. It also leads to global adoption and growth.