What is Liquity (LQTY)?
Liquity is a decentralized borrowing protocol that enables interest-free loans by collateralizing Ethereum (ETH). Users can borrow LUSD, a stablecoin pegged to the US dollar, with a minimum collateral ratio of 110%, paying only a one-time borrowing fee. The protocol operates entirely on the Ethereum blockchain using ERC-20 tokens.
Key Features of Liquity (LQTY)
1. Capital-Efficient Borrowing
- Troves (Collateralized Debt Positions): Each Trove maintains a 110% collateral ratio, significantly lower than competitors like MakerDAO (150%). This optimizes capital efficiency.
- Stability Pool: A unique liquidity reservoir that absorbs LUSD debt from liquidated Troves, ensuring protocol solvency during market downturns.
2. Decentralized Governance & Incentives
- Hosted GUIs: Third parties can host Liquity’s frontend interfaces, earning incentives based on liquidity attracted (similar to Serum DEX).
Dual-Token Model:
- LUSD: Stablecoin for borrowing.
- LQTY: Governance and rewards token.
3. Instant Liquidation Protection
- Liquidations are automated via the Stability Pool, reducing risks for borrowers and maintaining system stability.
LQTY Tokenomics
Token Metrics
- Name: LQTY Token
- Blockchain: Ethereum (ERC-20)
- Contract:
0x6dea81c8171d0ba574754ef6f8b412f2ed88c54d - Total Supply: 100,000,000 LQTY
- Circulating Supply: 3,676,781 LQTY (as of May 2021)
Token Allocation
| Category | Percentage | Details |
|---|---|---|
| Investors | 33.9% | Locked for 1 year |
| Rewards (Stability Pool) | 32% | Distributed to liquidity providers |
| Team & Advisors | 23.7% | 1-year lockup, then vesting |
| Community Reserve | 2% | Hackathons, events |
Token Use Cases
- Staking Rewards: Earn fees from loan issuances and redemptions.
- Governance: Future voting rights on protocol upgrades.
- Incentives: Rewards for Stability Pool participants and GUI hosts.
How to Acquire LQTY Tokens
- Stability Pool: Deposit LUSD to earn LQTY rewards.
- Host a GUI: Earn incentives by hosting a Liquity interface.
- Exchanges: Trade LQTY on supported platforms like Uniswap.
Storing LQTY Tokens
- Recommended Wallets: MetaMask, Coin98 Wallet (ERC-20 compatible).
Steps for Coin98 Wallet:
- Select "Receive" and search for LQTY.
- Copy the address and send tokens.
Roadmap & Updates
To be announced. Follow Liquity’s official website for updates.
Team, Investors & Partners
Core Team
- Robert Lauko: Ex-DFINITY researcher.
- Rick Pardoe: Serial entrepreneur.
Investors
- Polychain Capital (Seed Round)
- Pantera Capital (Series B)
Partners
- Chainlink (Oracle services)
- Tellor (Decentralized data)
Competitors
- MakerDAO (MKR): Higher collateral requirements (150%).
- Similar Protocols: Aave, Compound (interest-based loans).
FAQs
1. What is the minimum collateral ratio for Liquity?
- 110%, lower than most DeFi protocols.
2. How does the Stability Pool work?
- Users deposit LUSD to absorb liquidated debt, earning LQTY rewards.
3. Where can I stake LQTY?
- Directly via Liquity’s Stability Pool or hosted GUIs.
4. Is LQTY a governance token?
- Currently, it’s used for rewards, but governance features may be added.
👉 Explore DeFi strategies with Liquity
Disclaimer: This content is for informational purposes only. Always conduct independent research before investing.
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