Flow Traders (Euronext: FLOW) becomes Lombard Finance’s pilot partner for its new Bitcoin Onchain Credit Strategy. On a chain $BTC Lending is still relatively small and Lombard plans an expansion with large-scale institutional platforms.
Flow Traders, a leading trading company, liquidity provider and market maker, will be able to lend stablecoins and access on-chain markets, which were previously difficult to access for institutional clients.
Lombard Finance has taken steps to make on-chain lending smoother and more accessible, allowing institutions to post on-chain collateral more efficiently. Lombard uses Chainlink’s CCIP interoperability tool, allowing cross-chain deposits $BTC.b, move collateral from Avalanche to Ethereum.
Lombard Finance has also opened its doors $BTC credit strategy through the Bitcoin Earn program for other institutional and retail clients.
As with others $BTC lending instruments, the Ethereum network is used for smoother transfers and cross-chain liquidity. The main reason is that access to stablecoin lending is most liquid on Ethereum and its compatible networks. This is why direct lending to Bitcoin never got off the ground, because stablecoins don’t run on Bitcoin’s network.
Flow Traders can borrow through private placement of collateral
Lombard Finance has adapted the DeFi lending model, which typically involves sending collateral to pools. Pools themselves have specific issues, such as capacity utilization, available liquidity and potential attacks to drain available funds. For this reason, using these liquidity pools is sometimes impossible for institutional clients.
“Asset managers have a real, ongoing need to lend to stablecoins, but until now, DeFi markets weren’t built to allow them to access them. This structure changes that. By separating the borrower from the collateral provider, the parties involved have made it possible for regulated, institutional trading firms to leverage onchain lending for the first time,” said Jacob Phillips, co-founder and CEO of Lombard Labs.
Lombard’s Bitcoin Onchain Credit Strategy will enable Flow Traders to access credit through an underwriting structure. $BTC will be delivered to Lombard and considered as collateral.
As a result, Flow Traders will gain access to stablecoins for other activities through the Cap automated marketplace. Cap is a dedicated private lending platform with principal protection for lenders. Cap automates the lending process and ensures that every loan is backed by financial guarantees in the chain. The loans have a special underwriter, who ensures that the collateral is verified and protected.
Each loan is kept in a locked room and is private to Flow Traders. With this step, Lombard will also achieve a breakthrough in the traditional private credit markets, by making use of credits $BTC reserves.
$BTC Lending has accelerated in the past month
$BTC The lending industry currently has about $4.31 billion in liquidity, according to the latest figures $BTC price recovery. Lombard Finance is the second largest protocol and currently has over $6 million across two chains.
Lombard is a proven protocol with $3.23 million in annualized fees, showing that credit markets were still buoyant.
The Bitcoin Onchain Credit Strategy builds on the already successful Bitcoin Earn program. Bitcoin Earn has already attracted over $1 billion in deposits, with over 38,500 users since launch.
Lombard uses $BTC.b and LBTC, two packaged forms of $BTCbecause of its multi-chain strategy. Currently, most reserves are on Ethereum, with smaller markets on Base and Solana.