Loan Lifecycle Example

1. Borrower Application

A real estate developer submits a loan request, providing property details via Liquid’s interface. The AI underwriting module evaluates metrics instantly rather than weeks.

1. Approval and BTC Allocation

Once approved, stablecoins flow from the chosen lending pool to the borrower. An additional defined percentage (e.g., 20–40%) of this principal is automatically converted into BTC and held in escrow, boosting collateralization.

1. Fixed Rate and Refinance Option

The borrower starts with a fixed-rate loan, allowing predictable monthly payments. If BTC appreciates or property value rises, the borrower may initiate a refinance at a lower rate, incurring only a 0.1% fee.

1. Interest Payments and Protocol Fees

The protocol automatically calculates interest due and routes itemized fees to the treasury. Depositors earn yield from the interest (after the protocol’s cut), while LIQUID token holders may receive a share of the protocol fees.

1. Repayment and Redemption

When the loan is repaid, the protocol credits interest and principal back to the pool. Depositors can redeem their dripTokens for their proportional share of stablecoins plus any BTC gains realized by the pool.