A Liquid USDT guide
from acquiring & lending to borrowing & exchanging
This guide explains everything you need to know about Liquid USDT to acquire and issue a loan on Lend at Hodl Hodl.
What is Liquid?
The Liquid Network is a sidechain-based settlement network that enables faster, more confidential Bitcoin transactions and the issuance of digital assets. As a sidechain of Bitcoin, Liquid allows you to move bitcoins (BTC) between the Bitcoin mainchain and the Liquid sidechain through a verifiable 1-to-1 peg. More information about Liquid.
Why Liquid USDT?
L-USDT are Tether coins issued on the Liquid sidechain. In comparison to USDT on Ethereum, L-USDT prevails in the following:
- Speed: transactions on the Liquid network are confirmed almost immediately.
- Transaction costs: an average Liquid network fee is around 1$.
- Confidentiality: Transaction amounts and asset types are hidden from third parties on the blockchain.
For Lenders: How to acquire and lend L-USDT?
Acquiring L-USDT
If you are looking to obtain USDT on Liquid, you have the following options:
- Centralized exchange
Exchange your assets to USDT and select Liquid sidechain when making a withdrawal. In this case, we suggest using Bitfinex or BTSE exchange.
- P2P exchange
Exchange your BTC to L-USDT on a P2P basis through the Hodl Hodl trading platform.
- Swap
Swap other crypto assets for L-USDT. We suggest using Liquiditi or SideShift AI.
NOTE THAT YOU ARE EXPECTED TO PERFORM THE REQUIRED DUE DILIGENCE AND MAKE SURE THAT THE SPECIFIC SERVICE PROVIDER COMPLIES WITH YOUR LOCAL REGULATIONS.
Lending L-USDT
1.Creating an Offer To Lend
- Go to the offer creation page and select the “To Lend” side.
- Decide what amount you are ready to lend.
- Select USDT from the сryptocurrencies list, then select Liquid in the blockchain’s field.
- Choose the period and the interest rate you are ready to lend at.
Please note that the interest rate you choose will be applied for the whole period of the Contract. - Next, you choose the LTV ratio, which determines the relative amount of the collateral the Borrower will need to lock in escrow to secure the loan. Please note that a higher LTV ratio entails a higher risk of Contract liquidation.
- Specify working hours for your Offer, during which your Offer will be listed and available to Borrowers.
- Tick the “Enable” box and press “Create” to publish your Offer and make it visible in the offer list.
2. Completing a Contract To Lend
The Contract starts when your Offer gets accepted by the Borrower, or you accept someone’s Offer to Lend.
Pending stage
The Contract has just been created. You can review the terms and either accept or cancel the Contract. To proceed, Accept the Contract and enter the information requested:
- Cryptocurrency repayment address — L-USDT address the debt will be repaid to;
- Bitcoin repayment address — Bitcoin address that will be used in case the repayment will be processed with BTC.
Next, confirm your payment password (or create and confirm if you are a new user) to generate a unique escrow address for your Contract. When the Payment password has been entered and confirmed by both, you (Lender) and the Borrower, the escrow account is generated, and the Contract is transferred into the Depositing stage.
Depositing stage
At this stage, you are waiting for the Borrower to deposit the required collateral amount in escrow. After the Borrower makes a deposit and the transaction receives 3 confirmations, the Contract is transferred into the Payment stage.
Payment stage
At this stage, you are asked to transfer the loan amount to the Borrower. Use the displayed payment details and send the required L-USDT amount to your counterparty.
NEVER PROCEED WITH THE PAYMENT BEFORE RECEIVING ALL OF THE CONFIRMATIONS AND THE PAYMENT ADDRESS FROM OUR SIDE.
After completing the payment, provide the link to the payment transaction (from https://blockstream.info) in the pop-up window. Click “Submit” and wait until the Borrower confirms a safe receipt. Right after the Contract is transferred into the In progress stage.
In progress stage
The Contract remains in this stage until the repayment date or Forced Liquidation (if any).
Repayment stage
After the Contract period is over, it will automatically be transferred into the Repayment stage. Now you are waiting for the Borrower to return the loan amount within the next 24 hours. If this does not happen, your loan gets repaid from the collateral.
After the repayment is made, Borrower uploads a payment transaction link, and you are asked to confirm a receipt.
When the funds are received, and the link is confirmed, the Contract is transferred into the Completed stage.
Completed stage
The Contract has been successfully completed.
For the Borrowers: how to borrow and exchange L-USDT?
How to borrow L-USDT?
1. Creating an Offer To Borrow
- Go to the offer creation page and select the “To Borrow” side.
- Decide what amount you are willing to borrow.
- Select USDT from the сryptocurrencies list, then select Liquid in the blockchain’s field.
- Choose the period and the interest rate you are ready to borrow at.
Please note that the interest rate you choose will be applied for the whole period of the Contract. - Next, you choose the LTV ratio, which determines the relative amount of the collateral you will need to lock in escrow in order to secure the loan. A higher LTV ratio entails a higher risk of Contract liquidation.
- Specify working hours for your Offer, during which your Offer will be listed and available to Lenders.
- Tick the “Enable” box and press “Create” to publish your Offer and make it visible in the offer list.
2. Completing a Contract To Borrow
The Contract starts when your Offer gets accepted by the Borrower, or you have accepted someone’s Offer to Lend.
Pending stage
The Contract has just been created. You can review the terms and either accept or cancel the Contract. In order to proceed, Accept the Contract and enter the information requested:
- Cryptocurrency payment address — the address the loan amount is transferred to;
- Bitcoin refund address — the address the refund of your collateral goes to after the Contract has been completed.
Next, confirm your payment password (or create and confirm if you are a new user) to generate a unique escrow address for your Contract. When the Payment password has been entered and confirmed by both, you (Borrower) and the Lender, the escrow account is generated, and the Contract is transferred into the Depositing stage.
Depositing stage
At this stage, you are asked to deposit the collateral amount in escrow in order to secure the loan. After the deposit is made and the transaction receives 3 confirmations, the Contract is transferred into the Payment stage.
Payment stage
At this stage, the Lender is asked to transfer the loan amount to your L-USDT address.
After you have received the payment and confirmed the payment link provided by the Lender, the Contract is transferred into the In progress stage.
In progress stage
The Contract remains in this stage until the repayment date or forced liquidation (if any). As a Borrower, you can always fully or partially repay the loan before its due date without any extra cost.
Repayment stage
After the Contract period is over, it will automatically be transferred into the Repayment stage. Now you have 24 hours to return the debt, if this does not happen, your collateral gets Liquidated, and the loan gets repaid from the collateral.
After the repayment is made, you are asked to upload a payment transaction link, and the Lender is requested to confirm the receipt.
When the funds are received, and the link is confirmed, the Contract is transferred into the Completed stage.
Completed stage
The Contract has been successfully completed. You can now release the collateral back to your wallet.
Exchanging / swapping L-USDT
If you are looking to exchange USDT on Liquid, you have the following options:
- Centralized exchange
Select Liquid sidechain when depositing USDT, then exchange it to your desired asset. In this case, we suggest using Bitfinex or BTSE exchange.
- P2P exchange
Exchange your L-USDT to BTC on a P2P basis through Hodl Hodl trading platform.
- Swap
Swap L-USDT for other crypto assets, use Liquiditi or SideShift AI.
NOTE THAT YOU ARE EXPECTED TO PERFORM THE REQUIRED DUE DILIGENCE AND MAKE SURE THAT THE SPECIFIC SERVICE PROVIDER COMPLIES WITH YOUR LOCAL REGULATIONS.
If, after reading this guide, you still have any questions, do not hesitate to contact us through any of the channels listed below.
For more detailed information, please visit our FAQ section.
If you would like to know more about Liquid Network, check out Blockstream’s Help Center.
Reach us
- Hodl Hodl trading platform: hodlhodl.com
- Lend at Hodl Hodl: lend.hodlhodl.com
- Predictions by Hodl Hodl: predictions.hodlhodl.com
- E-mail: support@hodlhodl.com
- Blog: hodlhodl.medium.com
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Hodl!
