Core concepts

Pools

What is a pool

A pool is a shared liquidity vault for a specific asset (like BTC, USDT, or ETH). Lenders supply assets to the pool to earn interest, while borrowers supply collateral to access this liquidity and pay interest on their loans. The interest paid by borrowers is distributed to lenders as yield. Each pool operates independently with its own interest rates based on supply and demand.

You can find live pool parameters on the Markets page.

Dynamic interest rates

Interest rates in each pool dynamically adjust based on supply and demand to maintain economically optimal conditions and secure the protocol. When utilization is low, rates are kept low to encourage borrowing. As more funds are borrowed and liquidity becomes scarce, rates increase to incentivize repayments and new supply. This creates a self-balancing system that ensures pools always have adequate liquidity for withdrawals while maximizing capital efficiency.

Borrow rate (APY)

The annual percentage yield (APY) applied to borrowed funds follows a dynamic model based on pool utilization:

Starts with a base rate when utilization is low
Increases gradually until reaching an "optimal utilization" point
Accelerates rapidly beyond optimal utilization to encourage repayment

Supply rate (APY)

The annual percentage yield (APY) you earn on your supplied assets. Your earnings come from:

Interest paid by borrowers in the pool
Adjusted by how much of the pool is being borrowed
Net of the protocol fee

APY represents the projected annualized return on your assets, based on the current pool rate and assuming compounding over a one-year period.

Higher utilization generally leads to better supply rates for lenders.

Base Rate

The minimum interest rate applied to a pool, even at very low utilization. This ensures borrowers always pay interest and lenders receive yield.

Utilization Rate

Utilization measures how much of a pool's supplied liquidity has been borrowed. A simple way to think about it is: Utilization = Total Borrowed / Total Supplied.

Equivalently, when a pool exposes available liquidity: Utilization = Total Debt / (Total Debt + Available Liquidity).

Low utilization means plenty of liquidity is available, so borrowing rates are usually lower. High utilization means liquidity is more scarce, so borrowing rates usually increase to encourage repayment and new supply.

Optimal Utilization Rate

The target utilization level marks where interest rates change sharply. Below this point, rates grow slowly; above it, they increase rapidly to maintain pool liquidity.

Liquidation Threshold

Each pool has its own liquidation threshold. This threshold helps determine when a borrowing position becomes liquidatable if the value of collateral falls relative to debt.

Liquidation threshold is different from max LTV. Max LTV controls how much a user can borrow when opening or increasing a position. Liquidation threshold controls when the position can be liquidated. Max LTV is lower than the liquidation threshold, creating a safety buffer.

Portfolio health summarizes how close the full portfolio is to liquidation. When portfolio health gets low, users can improve it by supplying more collateral, repaying debt, or reducing exposure.

Supply/Borrow Caps

Maximum limits set on how much can be supplied to or borrowed from each pool. These risk management tools help prevent any single pool from becoming too large relative to the protocol's overall risk profile.

Same-asset borrowing

Some pools may allow same-asset borrowing, and some may disable it. Same-asset borrowing means a user can borrow the same asset they have supplied, subject to protocol rules, current pool configuration, dust thresholds, and portfolio health.

Check the Markets page for the current setting on each live market.

Your profile

Position

Your position tracks your lending and borrowing activity with a specific asset. Each position shows:

How much you've supplied (deposited)
How much you've borrowed
Interest earned on supplies
Interest owed on borrows
Your net balance with that asset

You automatically get one position per asset type when you first interact with a pool.

Health factor

Your portfolio health is measured by a Health Factor - a simple number that tells you how safe your borrowing position is:

See advanced Health Factor explanation here.

The UI displays the portfolio health as a percentage, where:

100%: No debt - you haven't borrowed anything
Above 0% to 99%: Your position is safe from liquidation - the higher the percentage, the safer you are
Close to 0%: You're at risk - the closer to 0%, the higher the liquidation risk
0%: Your position can be partially liquidated

You can switch to traditional decimal format in General Settings if you prefer.

Collateral

Collateral is the set of assets backing your borrow positions. When you borrow, all supplied assets automatically count toward collateral. The protocol requires over-collateralization, meaning the total value of your collateral must exceed the value of your borrow to maintain a safety buffer.

Weighted average liquidation threshold

When you have positions across multiple pools, your overall borrowing limit is determined by the weighted average liquidation threshold of all your collateral. This determines your overall health factor and liquidation risk.

Net APY

Combined effect of all supply and borrow positions on net worth.

It is possible to have a negative net APY if you accrue more interest from your debt than you earn from your supplied assets.

Net value

The value of supplied assets minus borrowed positions.

Net interest

Interest earned from supplied assets minus interest due on borrowed assets for open positions. Interest accrues continuously and compounds over time.

If the interest due is higher than the interest earned, the net interest will be negative.

Current pool parameters

Live pool parameters can change over time as markets and protocol configuration evolve. Use the [Markets page in the app](https://app.liquidium.fi/markets) as the source of truth. The Markets page also explains supported assets, APYs, caps, utilization, LTV, liquidation thresholds, reserve factors, and same-asset borrowing settings.

Cross-chain architecture

Native assets everywhere

Unlike other platforms that require wrapped tokens or complex bridges, Liquidium lets you use your actual Bitcoin, Ethereum, and other native assets directly. You can:

Supply Bitcoin from your Bitcoin wallet to earn yield
Borrow USDT that gets sent to your Ethereum address
Use your Bitcoin as collateral to borrow assets on other chains
Perform these actions with any supported asset, no matter which chain it lives on

How it works

The protocol runs on IC (Internet Computer), which can natively interact with other blockchains without trusted intermediaries. Behind the scenes, your native assets are represented as "chain-key assets" (like ckBTC for Bitcoin) - these are 1:1 backed by the real assets and secured by multiple independent nodes working together.

Running everything on IC enables instant liquidations to keep the protocol healthy. While Bitcoin takes 10-40 minutes per transaction and other chains can be slow during congestion, our liquidation system completes full cycles in just 15 seconds thanks to IC's sub-second finality.

From your perspective, it's seamless - just send and receive native tokens as usual. The protocol handles all the complexity.

Learn more about IC's Chain Fusion Technology