The Rise of Bitcoin DeFi: A Look at Liquidium and Runes

Over the past year, the Bitcoin Renaissance has brought significant attention to BTCfi, or "Bitcoin DeFi" applications. Despite the hype, very few of these applications have delivered on their promises or managed to retain a meaningful number of "actual" users.

The Leading Lending Platform: Liquidium

To put things into perspective, the leading lending platform for Bitcoin assets, Liquidium, allows users to borrow against their Runes, Ordinals, and BRC-20 assets. Borrowers pay an interest rate to lenders in exchange for their Bitcoin, and loans are overcollateralized by the Bitcoin assets themselves to ensure security.

Bitcoin DeFi Growth

In about 12 months, Liquidium has executed over 75,000 loans, totaling more than $360 million in loan volume and paying over $6.3 million in native BTC interest to lenders. Despite these numbers, Bitcoin DeFi's size is subjective and can be compared to other chains like Ethereum or Solana.

Runes: The Dominant Asset

After a rocky start, Runes have become the majority asset backing Bitcoin native loans on Liquidium. Runes offer a more efficient protocol with a lighter load on the Bitcoin blockchain and improved user experience compared to Ordinals and BRC-20s.

Impact on Bitcoin and Decentralized Finance

Regardless of personal opinions, the trust in the Bitcoin blockchain for decentralized loans denominated in Bitcoin is a significant development. This trend showcases Bitcoin's security guarantees and attracts new economic activities on-chain, which is bullish for Bitcoin's growth.

Encouraging Native Transactions

All transactions on Liquidium are natively secured on the Bitcoin blockchain, emphasizing the simplicity and security of using Bitcoin directly. Supporting developers and platforms building on Bitcoin in this manner can further enhance the ecosystem.

This article presents the author's perspective and does not necessarily represent the views of BTC Inc or Bitcoin Magazine.

Frequently Asked Questions

How is gold taxed within a Roth IRA

An investment account's tax is calculated based on the current value of the account, and not on what you paid originally. If you invest $1,000 in mutual funds or stocks and then later sell them, all gains are subjected to taxes.

However, if the money is deposited into a traditional IRA/401(k), the tax on the withdrawal of the money is not applicable. Taxes are only charged on capital gains or dividends earned, which only apply to investments longer than one calendar year.

These rules vary from one state to another. In Maryland, for example, withdrawals must be made within 60 days of reaching the age of 59 1/2 in order to qualify. Massachusetts allows you to delay withdrawals until April 1. New York allows you to wait until age 70 1/2. To avoid any penalties, plan your retirement savings and take your distributions as early as possible.

Can I buy gold with my self-directed IRA?

While you can purchase gold from your self-directed IRA (or any other brokerage firm), you must first open a brokerage account such as TD Ameritrade. You can also transfer funds from an existing retirement fund.

The IRS allows individuals to contribute up to $5,500 annually ($6,500 if married and filing jointly) to a traditional IRA. Individuals are allowed to contribute $1,000 each ($2,000 if married or filing jointly) to a Roth IRA.

You should consider buying physical gold bullion if you decide to invest in it. Futures contracts, which are financial instruments based upon the price of gold, are financial instruments. They allow you to speculate on future prices without owning the metal itself. Physical bullion, however, is real gold and silver bars that you can hold in your hand.

Can the government steal your gold?

Because you have it, the government can't take it. It's yours, and you earned it by working hard. It belongs exclusively to you. This rule could be broken by exceptions. You can lose your gold if you have been convicted for fraud against the federal governments. If you owe taxes, your precious metals could be taken away. You can keep your gold even if your taxes are not paid.

Statistics

  • (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
  • This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
  • If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
  • If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
  • You can only purchase gold bars at least 99.5% purity. (forbes.com)

External Links

cftc.gov

law.cornell.edu

wsj.com

irs.gov

How To

Investing In Gold vs. Investing In Stocks

These days, it might seem quite risky to invest your money in gold. This is because many people believe gold is no longer financially profitable. This belief arises because most people believe that the global economy is driving down gold prices. They fear that investing in gold will result in a loss of money. There are many benefits to investing in gold. Here are some examples.

One of the oldest currencies known to man is gold. Its use can be traced back to thousands of years ago. It was used by many people around the globe as a currency store. It's still used by countries like South Africa as a method of payment.

When deciding whether to invest in gold, the first thing you need to do is to decide what price per gram you are willing to pay. When looking into buying gold bullion, you must decide how much you are willing to spend per gram. If you don’t know what the current market price is, you can always call a local jewelry store and ask them their opinion.

It's worth noting, however, that while gold prices have fallen recently the cost of producing gold is on the rise. So while the price of gold has declined, production costs haven't changed.

The amount of gold that you are planning to purchase is another important consideration when deciding whether or not gold should be bought. If you plan to buy enough gold to cover your wedding rings then it is probably a good idea to wait before buying any more. But, if your goal is to make long-term investments in gold, this might be worth considering. Profitable gold can be sold at a lower price than it was when you bought it.

We hope our article has given you a better understanding of gold as an investment tool. Before making any investment decisions, we strongly advise that you thoroughly research all options. Only then will you be able to make an informed decision.

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By: Guillaume Girard
Title: The Rise of Bitcoin DeFi: A Look at Liquidium and Runes
Sourced From: bitcoinmagazine.com/takes/bitcoin-defi-is-finding-product-market-fit-with-runes
Published Date: Tue, 14 Jan 2025 19:57:19 GMT

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