Liquidium Launches Native Staking Framework for Bitcoin Runes

TLDR

• Liquidium’s framework supports staking of Rune-standard assets on Bitcoin.
• 30% of lending revenue allocated for LIQ token buybacks.
• Protocol has processed over 102,000 loans totaling $450 million.

Liquidium has introduced a new native liquid staking framework for Bitcoin Runes protocol tokens. This innovative solution, developed by a team of pseudonymous founders, is designed to facilitate native yield strategies and increase composability for assets on the Bitcoin network. This marks a significant development in Bitcoin DeFi, allowing stakeholders to explore staking opportunities without the conventional risks of wrapping or custodianship.

Liquidium, which previously operated the peer-to-peer Bitcoin lending platform LiquidiumWTF, is expanding its financial repertoire with the sLIQ token. The liquid staking solution enables staking of Rune-standard assets on Bitcoin’s UTXO model, allowing participants to generate yield while ensuring decentralized governance. As of their latest update, the framework supports native DeFi composability on the Bitcoin network.

Staking Framework Details and Impact

The new framework introduces protocol-driven tokenomics, with 30% of lending revenue allocated to buybacks of the LIQ token, enhancing rewards for stakers. Liquidium chooses to fund operational needs with the remaining 70% of the revenue. This strategic model aims to boost liquidity and promote integrations, building on an open-source foundation that encourages external development.

Assets that can directly benefit from this framework include BTC, which underpins protocol operations and settlement on Bitcoin’s mainnet. LIQ tokens can be staked and subsequently converted to sLIQ for rewards. The framework also supports Runes tokens and BRC-20, enabling these assets to participate as collateral and liquidity providers.

Operational Mechanics and Asset Security

Liquidium’s protocol operates on Bitcoin’s mainnet, ensuring that all staking logic is executed natively. The sLIQ mechanism incorporates a 7-day cooldown period for unstaking, which mitigates the risk of flash loan exploits. This mechanism also updates the sLIQ/LIQ exchange rate daily based on revenue inflows, maintaining equity among stakeholders.

As of now, there has been no publication of official Total Value Locked (TVL) statistics for the sLIQ staking contract. However, historical data indicates that Liquidium’s lending protocol has processed over 102,000 loans with a total volume of $450 million and has generated $8 million in interest for lenders.

Comparisons to Ethereum DeFi Models

Comparable developments have occurred in Ethereum DeFi, notably with Lido’s stETH which significantly altered staking dynamics for Ethereum. Liquidium sets a precedent for Bitcoin with the Runes-native staking framework, despite initial adoption and liquidity being modest in comparison. Its native model may draw idle BTC into active use, laying the groundwork for more intricate DeFi architectures on Bitcoin.

This advancement could enable new derivatives, swaps, and governance integrations for Bitcoin-based tokens. The design is aimed at supporting potential future integrations with Layer 2 solutions and cross-chain lending systems, broadening the scope of Bitcoin’s utility in DeFi.

Community and Institutional Feedback

Community discussions characterized the launch as a significant milestone for Bitcoin DeFi, emphasizing the technical innovation in open-source staking logic. Although no significant commentary from key opinion leaders (KOLs) or financial regulators has been recorded, the project’s focus remains on enhancing collaboration and development through platforms like GitHub and Discord.

Liquidium is actively engaging with the community to improve wallet integrations and manage UTXO fragmentation, aiming to optimize the user experience and broaden the platform’s technical capabilities. Despite the absence of major institutional statements, Liquidium continues to operate transparently through open technical resources and updates.