Lend at Hodl Hodl, a P2P lending platform that champions user privacy, has announced the addition of Liquid Bitcoin (L-BTC) lending. This follows the success of Liquid-based USDt on the platform, where it is currently the most-loaned asset.
An Alternative to Swaps
L-BTC lending will provide Bitcoin users with an alternative on-ramp to improved privacy, faster transaction times, and lower transaction fees for their trading activities. Rather than swapping in and out of L-BTC through an exchange or swap platform, users can instead borrow L-BTC against their BTC collateral, then later repay their loan in L-BTC to receive their BTC.
Another possible application of the L-BTC loans is to potentially defer sale events while trading using leveraged bitcoin. By maintaining ownership over their original bitcoin as collateral, traders may be able to use the borrowed L-BTC to trade on the Bitcoin markets without triggering a sale event on their long-term hodl stash.
Also, unlike when lending other assets, users borrowing L-BTC do not have to worry about liquidation because L-BTC is pegged 1:1 with Bitcoin.
There are many reasons Bitcoin users may prefer to hold L-BTC in their trading and transacting activities:
Assets on the Liquid Network use a cryptographic protocol that protects certain financial data, including the asset type and the amount transacted, from parties outside of the two settlement members.
Faster Transaction Times
The average confirmation time for a Bitcoin transaction is roughly ten minutes and can vary greatly, sometimes lasting hours. Transactions on Liquid are fully settled in a reliable two minutes—providing timely trades with peace of mind.
Lower Transaction Fees
As Bitcoin prices rise, there will be an inevitable increase in transaction fees. By using L-BTC, which requires one-tenth of Bitcoin's minimum transaction fee, borrowers can significantly reduce their transaction costs.