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@LiquityProtocol
Interest-free borrowing on #ETH. Home to #LUSD - the unstoppable stablecoin.
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optimistic spring on @Optimism is in full flow 🔴 looking for things to do with your LUSD? here are a few options 👇 1) @VelodromeFi holders and liquidity providers of LUSD can get LP rewards on 4 different stablecoin and ETH pairs! check it out: https://velodrome.finance/ 2) @PoolTogether_ @PoolTogether_ the permissionless savings protocol, just launched their new version. LPs can pool their LUSD into the LUSD vault and get extra OP rewards Check it out : https://pooltogether.com/
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🎉 Happy 3 years of Liquity! 🎈 What a journey it's been: • From pioneering immutable, interest-free borrowing ✅ • To becoming the first protocol to reach $1B within the first 10 days 👀 • To being one of the most forked protocols 😅 A heartfelt THANK YOU to our community for placing your trust in code, decentralization, and immutability 🙏 But the journey is far from over Liquity v2 awaits, and brings with it a new primitive: user-set interest rates. Onward!
in light of recent goVerNancE turmoil, a reminder that Liquity v2 will bring • no tradFi exposure • governance minimization • immutability • full autonomy over your interest rates max control, min reliance on third parties opt for peace of mind with $LUSD, and soon, $BOLD
Read our blog post on the borrowing enhancements that Liquity v2 brings here: https://t.co/tMzwTKq3C1 https://t.co/10GSvTpfty
Read our blog post on the borrowing enhancements that Liquity v2 brings here: https://t.co/tMzwTKq3C1 https://t.co/10GSvTpfty
Liquity v2: Enhancing the borrowing experience Liquity v2's introduction of user-set interest rates brings an innovative approach to immutable, governance minimized protocols that are better adapted for more versatile market conditions ⚖️ But that's not all; let’s take a quick look at some of the other key features v2 introduces. Here's a quick TL;DR (blog post in the next tweet) 👇 • User-set interest rates • New collateral types - ETH and LST’s • Multiple Troves per address (and transferable) • Less frequent redemptions • Protocol-incentivized liquidity • Higher realizable LTV • Short-term loans • No more Recovery Mode • 1-click leverage And keeping what Liquity is known for: • No TradFi exposure • Immutability • Rigorous security • Predictable fees Let’s break down the borrowing enhancements in more detail ⏬ User-set interest rates 📊 User-set interest rates introduce a new primitive to DeFi. As a borrower, you will be able to choose any rate you like, and have full control over how much you want to pay. When opening a Trove, in addition to selecting the collateral and the amount to borrow, you have the freedom to set your own interest rate, which can be adjusted at any time. By introducing user-set interest rates, Liquity v2 splits redemption risk and liquidation risk. Liquidations will still be based on your loan-to-value ratio (LTV), while redemptions will be based on the interest rate you are paying, starting from borrowers paying the least. For a hands-off borrowing experience, Liquity v2 will also introduce the ability to delegate your interest rate to a 3rd party. 👇 New collateral types - ETH and LSTs 🔹 Apart from ETH, users will also be able to use certain LSTs as collateral. Every collateral will have its own separate borrow market, with its own interest rates and risk parameters. 👇 Less frequent redemptions ⏲️ The main force to decrease redemption frequency in v2 is the ability to increase BOLD holding demand. When redemptions occur, borrowers will tend to raise their interest rates to protect their positions. This will result in an increased yield for Stability Pool depositors, making it more attractive to buy and hold BOLD. 👇 Protocol-incentivized liquidity 🌊 To ensure sufficient liquidity on the secondary market, Liquity v2 comes with built-in liquidity incentives. It will divert a portion of its interest revenue to eligible LPs, determining the split between the pools through regular gauge voting 👇 Multiple and transferable Troves ✦ In v1, each user (Ethereum address) can have only one Trove open. In v2, you will be able to have multiple loans, even for the same collateral type. This enables you to apply different strategies for different portions of your portfolio. Furthermore, Troves are easily transferrable between addresses (ERC721). 👇 Short-term loans 🏦 In Liquity v1 you pay the borrow fee up front. This is great for longer loans, but not so much for short-term ones. With v2 there will be no up-front fee, but ongoing interest rate payments. This makes it much more suitable for short-term loans, and with the adjustable rates, flexible to changing conditions. 👇 No more Recovery Mode ✂️ Recovery Mode is a special protocol state in Liquity v1 where loans with a CR below 150%. The removal of Recovery Mode in v2 ensures that borrowers can benefit from a permanently high LTV regardless of the system state, and up to 11x leverage. 👇 1-click leverage 🎚️ You will be able to easily leverage up on your position with just one click. Leveraging (staked) ETH position is popular among Liquity users and across DeFi as a whole. In v2, you will be able to do it by just selecting your desired leverage and executing one transaction. All the differences in one image 👀 KEEPING WHAT LIQUITY IS KNOWN FOR ✅ While there are plenty of changes coming with v2, it will keep many things v1 is known and admired for 💪 No TradFi exposure ❌ Everything will live and be fully verifiable on-chain. No real world assets will be used, nor will there be any touch-points with centralized exchanges or similar institutions. Immutability ⛓️ All core contracts will be immutable, minimizing attack surface area. As with Liquity v1, no external parties or even the team itself, can ever change the protocol. Governance will be limited to peripheral components of the system, like LP incentives. Rigorous security 🔒 Liquity v1 is a thoroughly researched, tested and audited product. v2 will follow the same standard of multiple audits from top companies, extensive economic modeling and thorough internal testing. Predictable fees⌛️ Liquity v1 & v2 are the only borrowing solutions where no parties can change what you pay unless you specifically authorize them to. In v2, this autonomy is taken to another level, as you can set your own interest rates. Liquity v2 brings a new, much more flexible and efficient borrowing experience. It will adapt to changing market conditions and can be fine tuned to any individual needs. Want to read things in more depth? Check out our blog post below 👇
Full article: https://t.co/tMzwTKq3C1
Full article: https://t.co/tMzwTKq3C1
The Liquity community has been eagerly requesting a more cost-effective borrowing solution.
Developed by @Nimbora_, the integration provides several benefits compared to borrowing on mainnet:
- Lower gas cost
- No minimum loan (mainnet is $2k)
- Access to a new, growing ecosystem
Additionally, LUSD borrowers will now benefit from @Starknet Spring.
They will not only have close to zero gas fees, but also get $STRK token incentives on top.
Check the detailed guide on how to borrow below.
@Nimbora_ Borrow guide: https://t.co/CHrz6byVyI
Developed by @Nimbora_, the integration provides several benefits compared to borrowing on mainnet:
- Lower gas cost
- No minimum loan (mainnet is $2k)
- Access to a new, growing ecosystem
Additionally, LUSD borrowers will now benefit from @Starknet Spring.
They will not only have close to zero gas fees, but also get $STRK token incentives on top.
Check the detailed guide on how to borrow below.
@Nimbora_ Borrow guide: https://t.co/CHrz6byVyI
A stablecoin must be stable.
That's why we dug deep when designing $BOLD, to ensure this is the case.
While $LUSD is the most resilient stablecoin in existence, it has one Achilles heel; there is no way to bring it down to peg.
When demand for a secure store of value is high, $LUSD tends to be above peg for long stretches of time.
As visible below, this was the case from July 2022 until August 2023.
While not an issue for holders, it is a one for borrowers. If they sell $LUSD after minting it, they need to buy it back later, potentially at a premium of 2% or 3%.
Not a good user experience.
But this will change with $BOLD!
For downside peg protection it will use the same bulletproof mechanism as $LUSD; redemptions.
However, Liquity v2 will also have upside protection.
Rooted in the new concept of user-set interest rates it will employ game theory to achieve this goal.
Rates are creating a balance between the cost of minting and the cost that users demand to hold it.
The logic is as follows:
1. Whenever $BOLD is above $1.00 there is no economic incentive to redeem.
2. As such, a rational user will lower the interest rate they’re paying for the loan.
3. This will result in a lower Stability Pool yield, and less hold-demand for $BOLD.
4. SP depositors will start exiting, selling $BOLD, lowering its price.
This mechanism was missing in v1 and led to long periods of $LUSD being over peg.
The ability to lower interest rates and thereby demand for $BOLD, will help bring the price back down and closer to peg again.
That's why we dug deep when designing $BOLD, to ensure this is the case.
While $LUSD is the most resilient stablecoin in existence, it has one Achilles heel; there is no way to bring it down to peg.
When demand for a secure store of value is high, $LUSD tends to be above peg for long stretches of time.
As visible below, this was the case from July 2022 until August 2023.
While not an issue for holders, it is a one for borrowers. If they sell $LUSD after minting it, they need to buy it back later, potentially at a premium of 2% or 3%.
Not a good user experience.
But this will change with $BOLD!
For downside peg protection it will use the same bulletproof mechanism as $LUSD; redemptions.
However, Liquity v2 will also have upside protection.
Rooted in the new concept of user-set interest rates it will employ game theory to achieve this goal.
Rates are creating a balance between the cost of minting and the cost that users demand to hold it.
The logic is as follows:
1. Whenever $BOLD is above $1.00 there is no economic incentive to redeem.
2. As such, a rational user will lower the interest rate they’re paying for the loan.
3. This will result in a lower Stability Pool yield, and less hold-demand for $BOLD.
4. SP depositors will start exiting, selling $BOLD, lowering its price.
This mechanism was missing in v1 and led to long periods of $LUSD being over peg.
The ability to lower interest rates and thereby demand for $BOLD, will help bring the price back down and closer to peg again.
🚨 another one
And this time on Mainnet 🔵
@blueprintfi_eth are a novel gas-efficient ve (3,3)+ DEX that have integrated both LUSD and bLUSD as assets!
Liquidity providers of either asset can earn LP rewards for 4 different pairs including the LUSD / bLUSD pair 👀
Check it out here:
https://www.blueprint.fi/liquidity
And this time on Mainnet 🔵
@blueprintfi_eth are a novel gas-efficient ve (3,3)+ DEX that have integrated both LUSD and bLUSD as assets!
Liquidity providers of either asset can earn LP rewards for 4 different pairs including the LUSD / bLUSD pair 👀
Check it out here:
https://www.blueprint.fi/liquidity
Why are user-set interest rates a game changer?
Until now, collateralized debt positions had 3 rate-primitives:
- Fixed rate, e.g. Liquity
- Governance set rates, e.g. Maker
- Algorithmic rate, e.g. crvUSD
Now we'll be pioneering another, the 4th primitive: user-set interest rates.
And we think it's the best one to date.
With it, a market driven policy rate is introduced.
And as you know, the market is always right 😉
The protocol taps into the wisdom of the crowd to create a rate which is:
- Adaptive
- Macro-driven
- Reflects individual needs
Additionally, we are bringing Liquity's capital efficiency to full bloom.
👇
How?
By splitting liquidation and redemption risks into separate parameters!
- Liquidations happen when you loan to value exceeds a certain level (eg. 91%)
- Redemptions happen when your interest rate set is too low
What's better, your interest rate can be delegated to 3rd party smart contract, service provider, or protocol as well.
This way, your loan can be very capital-efficient while at the same time have zero redemption risk.
Here's a cheat-sheet which illustrates our point - shoutout to @bjnpck for the nifty artwork.
Your voice matters,
Join us on our Discord if you have any questions or insights:
https://t.co/txMFZCDPOi
Until now, collateralized debt positions had 3 rate-primitives:
- Fixed rate, e.g. Liquity
- Governance set rates, e.g. Maker
- Algorithmic rate, e.g. crvUSD
Now we'll be pioneering another, the 4th primitive: user-set interest rates.
And we think it's the best one to date.
With it, a market driven policy rate is introduced.
And as you know, the market is always right 😉
The protocol taps into the wisdom of the crowd to create a rate which is:
- Adaptive
- Macro-driven
- Reflects individual needs
Additionally, we are bringing Liquity's capital efficiency to full bloom.
👇
How?
By splitting liquidation and redemption risks into separate parameters!
- Liquidations happen when you loan to value exceeds a certain level (eg. 91%)
- Redemptions happen when your interest rate set is too low
What's better, your interest rate can be delegated to 3rd party smart contract, service provider, or protocol as well.
This way, your loan can be very capital-efficient while at the same time have zero redemption risk.
Here's a cheat-sheet which illustrates our point - shoutout to @bjnpck for the nifty artwork.
Your voice matters,
Join us on our Discord if you have any questions or insights:
https://t.co/txMFZCDPOi