This guide explains how you can use your Rune tokens as collateral to borrow Bitcoin (BTC) on Liquidium. Liquidium offers two primary methods for borrowing against Runes:
Instant Loans: A streamlined process where you borrow directly from automated liquidity vaults, receiving funds quickly after one confirmation.
Manual (Classic) Loans: The traditional peer-to-peer (P2P) method where you accept offers created by other users (lenders). This requires the lender to manually countersign the loan.
Choose the method that best suits your needs for speed and flexibility.
1. Instant Loans for Runes
Instant Loans provide the fastest way to borrow BTC against your Runes. You interact with automated vaults, bypassing the need for direct lender matching and approval.
Prerequisites:
Compatible Wallet: Ensure you have a compatible wallet connected. Supported wallets include Xverse, Magic Eden Wallet, OKX, Phantom, UniSat, Leather, and Wizz Wallet.
Note on Ledger: Support for Rune loans via Ledger devices may be limited. Please check the Ledger Support article for the latest status.
Sufficient Runes: You need enough confirmed Rune tokens in your wallet to cover the collateral amount. UTXOs and UTXO Consolidation
Sufficient BTC for Fees: You need enough confirmed BTC in your wallet to cover the Bitcoin network fees for starting and repaying the loan.
Steps to Borrow Instantly:
Connect Wallet: Connect your preferred wallet to Liquidium. You may need to sign one or two messages to confirm your Ordinals and payment addresses, depending on the wallet.
Navigate & Select Instant: Go to the main borrowing page and select the "Runes" tab. Toggle the switch in the upper-right corner from "Manual" to "Instant" if it's not set to "Instant" already.
Find Rune & Click Borrow: Browse the available Rune projects. Once you find the Rune you hold and wish to use as collateral, click the "Borrow" button next to it.
Select Rune Amount: Enter the amount of Runes you want to use as collateral or use the slider. The interface will display a graph showing available loan offers based on the Loan-to-Value (LTV) ratio for the amount you select.
Review Terms & Submit: The modal will show the best available loan terms based on the amount you selected, including the BTC amount you'll receive, the interest rate, loan duration, and LTV. Review these details carefully. If you're satisfied, click "Submit".
Confirm in Wallet: Your wallet will prompt you to sign the transaction. Confirm the transaction details in your wallet.
Receive Funds: Once the Bitcoin transaction receives one confirmation on the blockchain (typically around 10 minutes), the loan starts, and the borrowed BTC will be sent to your wallet. The loan will appear under the "Borrowing" tab on your Portfolio page.
Fees for Instant Rune Borrowing:
Activation Fee: An activation fee is deducted from the principal loan amount when the loan starts. The fee is calculated as the higher of:
0.25% of the principal loan amount, OR
A minimum fee of 1000 sats.
Network Fees: The borrower pays the Bitcoin network fees (gas fees) for both starting the loan and repaying the loan. These fees vary based on network congestion. Transaction Time and Fees
For details on potential platform fee discounts based on token holdings, see Tiered Platform Fee Discounts and Bonuses for Token Holders.
Managing Instant Loans:
You can track your active Instant Rune loans, including remaining duration and repayment amount, on your Portfolio page.
2. Manual (Classic) Loans for Runes
Manual (Classic) loans involve borrowing directly from offers created by other Liquidium users (lenders). This P2P method requires the lender to countersign the transaction after you accept their offer.
Prerequisites:
Compatible Wallet: Ensure you have a compatible wallet connected. Supported wallets include Xverse, Magic Eden Wallet, OKX, Phantom, UniSat, Leather, and Wizz Wallet.
Note on Ledger: Support for Rune loans via Ledger devices may be limited. Please check the Ledger Support article for the latest status.
Sufficient Runes: You need enough confirmed Rune tokens in your wallet. Liquidium can automatically split your Rune UTXOs if needed to match the required collateral amount.
Sufficient BTC for Fees: You need enough confirmed BTC in your wallet to cover Bitcoin network fees.
Finding & Accepting Manual Offers:
There are two ways to accept manual offers:
Method 1: Using the "Borrow" Button (Accept Best Offer / Bundle)
This method automatically selects the best available offer(s) for the Rune you choose.
Find Rune & Click Borrow: On the main borrowing page (ensure you are on the "Manual" toggle), find the Rune project you own and click the "Borrow" button.
Select Rune Batch: Choose the specific Rune batch (UTXO) you want to use as collateral from your wallet. The best available loan terms will be displayed.
Choose Fee Rate: Select your desired Bitcoin network fee rate (Low, Medium, High, or Custom). Click "Continue".
Confirm in Wallet: Your wallet will pop up.
Offer Bundle: If multiple lender offers are very close (e.g., within 2% loan amount), Liquidium may bundle them. You might need to click "Confirm" 2-3 times in your wallet to sign for all potential offers. The first lender to countersign gets the loan.
Single Best Offer: If there's only one clear best offer, you'll likely only need to confirm once.
Await Lender Approval: After you sign, the lender(s) are notified. They must countersign the transaction to start the loan. This can take time depending on lender availability. Recommendation: Wait at least 8 hours before canceling. See Lender Ratings for lender acceptance history.
Loan Starts: Once the lender countersigns and the transaction confirms on the blockchain, the loan starts, and BTC is sent to your wallet. Track it in your Portfolio page.
Method 2: Using the "Offers" Button (Select a Specific Offer)
This method allows you to browse all available offers for a Rune and choose a specific one.
Find Rune & Click Offers: On the main borrowing page ("Manual" toggle), find the Rune project and click the "Offers" button.
Select Batch Size (Optional but Recommended): You might need to specify the batch size you intend to borrow against to see relevant offers.
Browse Offer Book: Review the list of available loan offers (loan amount, interest, duration, LTV, lender rating). Click "Borrow" next to the specific offer you want to accept.
Select Rune Batch: Choose the Rune batch from your wallet to use as collateral.
Choose Fee Rate: Select your desired network fee rate and click "Continue".
Confirm in Wallet: Confirm the transaction details in your wallet.
Await Lender Approval: The specific lender you chose is notified and must countersign.
Loan Starts: Once the lender countersigns and the transaction confirms, the loan starts. Track it in your Portfolio page.
Canceling a Manual Loan Request:
You can cancel your request before the lender countersigns. Go to your Portfolio page, find the loan in the "Pending" section, and click the cancel button.
Fees for Manual Rune Borrowing:
Platform Fee: Included in the interest rate you agree to pay. Liquidium takes a portion of the total interest. Discounts may apply based on your Liquidium token holdings.
Network Fees: The borrower pays the Bitcoin network fees for both starting the loan and repaying the loan.
3. Repaying Rune Loans (Instant & Manual)
Repaying your loan on time is crucial to get your Rune collateral back and avoid default. The process is the same for both Instant and Manual Rune loans.
Steps to Repay:
Go to Portfolio: Navigate to your Portfolio page and find the active loan under the "Borrowing" tab.
Click Repay: Click the "Repay" button for the loan you wish to settle.
Select Fee Rate: Choose your desired network fee rate for the repayment transaction. Ensure you have enough confirmed BTC in your wallet to cover the repayment amount (principal + interest) plus the network fee.
Confirm & Sign: Click "Repay" in the modal, then confirm and sign the transaction in your wallet.
Wait for Confirmation: The repayment needs to be confirmed on the Bitcoin blockchain.
Collateral Returned Automatically: Once the repayment transaction is confirmed, your Rune collateral is automatically released from the escrow and sent back to your wallet. No manual "Unlock" step is required for Rune loans.
Important Notes on Repayment:
Confirmed BTC: Generally, you need confirmed BTC for repayment. However, BTC received from a Liquidium loan might be usable for repayment even while unconfirmed, thanks to recent updates. External unconfirmed funds cannot be used. Check Errors explained or Common Issues for details.
Speeding Up: If your repayment transaction is stuck due to low fees, you can use the Child-Pays-For-Parent (CPFP) feature.
Timeliness: Initiate the repayment before the loan timer expires. Even if the confirmation happens slightly after expiry, initiating it beforehand counts as timely repayment.
4. Defaults & Other Considerations
Default: If you don't repay the loan before expiry, the loan defaults. You keep the borrowed BTC, but the lender receives your Rune collateral.
Transaction Confirmation: Monitor transaction status on a block explorer like mempool.space. If fees are too low during congestion, transactions can be delayed.
Rebuilds (Manual Loans): If the lender's or borrower's UTXOs change before a manual loan starts, the lender might need to "rebuild" the transaction, requiring you to sign again.
Minimum Loan Size: The minimum loan amount for Rune loans is currently 0.001 BTC (subject to change). Check the FAQ for current minimums.
Airdrops: If Runes held as collateral receive an airdrop during the loan, the airdrop goes into the escrow. It will be automatically returned to the borrower upon successful repayment or can be claimed by the lender after a default.
5. Comparison: Instant vs. Manual Rune Loans
Feature | Instant Rune Loans | Manual (Classic) Rune Loans |
Speed | Faster (Funds after ~10 min confirm) | Slower (Requires lender countersign) |
Process | Automated matching with vaults | P2P matching with lender offers |
Lender Action | None required to start loan | Lender must countersign transaction |
Offer Selection | Accepts best available terms from vault | Can accept best OR specific lender offer |
Use Case | Need liquidity quickly, simplicity | Potentially better terms, specific offers |