What Is Liquity.org?
Liquity.org is a decentralized borrowing protocol that allows you to draw 0% interest loans against Ether used as collateral. Loans are paid out in LUSD – a USD pegged stable coin, and need to maintain a minimum collateral ratio of only 110%. In addition to the collateral, the loans are secured by a Stability Pool containing LUSD and by fellow borrowers collectively acting as guarantors of last resort. Learn more about these mechanisms under Liquidations.
Liquity Coin as a protocol is non-custodial, immutable and governance-free. LUSD is the USD-pegged stable coin used to pay out loans on the protocol. At any time it can be redeemed against the underlying collateral at face value. To borrow you must open a Trove and deposit a certain amount of collateral (ETH) to it and can then draw LUSD up to a collateral ratio of 110%
Liquity.org Storage Key Points
|Circulating Supply||1.47B LUSD|
|Source Code||Click Here To View Source Code|
|Explorers||Click Here To View Explorers|
|Twitter Page||Click Here To Visit Twitter Group|
|Whitepaper||Click Here To View|
|Official Project Website||Click Here To Visit Project Website|
How does it work?
Liquity.org the protocol pays out LQTY rewards pro rata to users who deposit LUSD to the Stability Pool. Frontend Operators can receive a portion of these rewards by tagging deposits facilitated by their interface and specifying the percentage of LQTY to “kickback” to their users. The revenue generated by a frontend grows proportionally with the total amount of LUSD deposited by its users to the Stability Pool.
A decentralized borrowing protocol offering interest-free liquidity against collateral in Ether. By utilizing a novel liquidation mechanism and leveraging an algorithmic monetary policy it can offer unprecedented benefits for borrowers.
Liquity Coin the system captures the revenue from the borrowing and redemption fees and pays it out on a pro rata basis to the stakers of the LQTY token. The tokens can be staked and unstacked any time with no minimum lockup period.
They users can draw the stable coin LUSD interest-free against their Ether used as collateral. They can thus obtain liquidity for free without any recurring costs. Since the protocol can generate the LUSD tokens itself, it does not need to pass any capital costs onto the borrowers, nor does it rely on interest rates to regulate monetary supply. There is a one-time borrowing fee as a percentage of the drawn amount. The fee rate depends on the current base rate, which is algorithmically governed by the protocol based on the redemption volumes.
Liquity.org LUSD is a fully redeemable stable coin. At any time, the system allows holders to redeem their LUSD for the underlying Ether collateral at face value. For example: A holder redeeming 100 LUSD would receive $100 worth of Ether collateral from the riskiest Trove(s), minus the current redemption fee. The redemption mechanism will create a price floor for LUSD, pushing its price back to parity whenever it drops below $1. Holders have an incentive to redeem LUSD if they can buy it for less than $1 and then convert it into Ether at a price of exactly $1. Every redemption leads to a contraction of the total LUSD supply and to an adjustment of the base rate.
Incentives for Stability Providers
Liquity Coin stability Providers are incentivized by the protocol in two ways:
- Liquidation gains: Liquidations will generally lead to a net gain for the Stability Pool, consisting of the difference between the absorbed debt (in LUSD) and the received collateral (in ETH). Stability Providers participating pro rata with their pool deposits thus acquire collateral from liquidated positions at a significant discount.
- Rewards: Stability Providers will continuously receive LQTY tokens based on the deposited LUSD and the kick back rate of the frontend through which their deposits are made. To encourage early adoption, the rewards start high and decay over time.
Benifit Of Liquity
They offers the best borrowing conditions on the market with the main benefits being:
- 0% interest rate
- A collateral ratio of just 110%
- Governance free – all operations are algorithmic and fully automated
- Directly redeemable – LUSD can be redeemed at face value for the underlying collateral, always and at any time
- Censorship resistant – the protocol is controlled by nobody
Use Of Liquity
Liquity.org you first need to choose a web interface (aka frontend) to access the system. The core team building the protocol will not operate a frontend. They instead accessed by third-party frontend applications and integration services.