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Interest Calculations
Interest Calculations
Robin avatar
Written by Robin
Updated over a month ago

Important Clarification on Lending and Borrowing

Liquidium’s lending and borrowing model involves two key roles: lenders and borrowers. Here's how the process works:

  • Lenders provide Bitcoin as loans and earn interest (in Bitcoin) on these loans based on the APY.

  • Borrowers use assets like NFTs or tokens like $DOG as collateral to borrow Bitcoin.

Note: DOG tokens (or other collateral tokens) are not lent out to earn interest. Instead, they are used solely as collateral to secure loans. Interest is earned by lenders who provide Bitcoin, not by those holding or depositing DOG tokens.

This distinction is critical to understanding the Liquidium platform’s mechanics.

APY (Annual Percentage Yield)

what is shown to the lender

((1 + Interest_Per_Duration / 100) ^ (365/Days_in_term) - 1) × 100

Interest (BTC) Paid

what the borrower pays in interest on a loan

Loan_Amount * (((APY/100) + 1)^(Days_in_term/365) - 1)

Interest Rate Per Duration

what is shown to the borrower

100 * (((APY/100) + 1)^(Days_In_Term/365) - 1)

Liquidium Platform Fee

Liquidum charges 20% of the interest generated on loans which can be reduced by holding Liquidium tokens.

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