Earning with BOLD Liquity v2 will provide stablecoin holders with: - Real, sustainable yield in the form of BOLD revenues - Arbitrage opportunities across multiple Stability Pools - Higher stablecoin yield than traditional money markets Here's how 👇 Liquity v2 is built to not only provide a unique borrowing experience, but to also offer a dynamic marketplace between borrowers and stablecoin holders looking to earn attractive yields. The protocol will direct the lion’s share of its interest revenue to incentivize Stability Pool depositors (aka “Earners”), creating sustainable earning opportunities for BOLD holders. Unlike existing lending markets, Liquity v2 will generally be able to pass on a positive spread between borrowers and Stability Pool depositors depending on the utilization of BOLD in broader DeFi. This isn't possible on lending markets where borrowers always pay higher rates than what lenders receive. Stability Pool and liquidations Building on Liquity v1’s achievements, the protocol harnesses Stability Pools for efficient liquidations of bad debt and to ensure overcollateralization. In v2, depositors receive a pro rata share of the liquidated collateral for which the BOLD gets burned. BOLD deposits will thus be partially converted into ETH or LSTs as liquidations take place. In addition to liquidation gains, Stability Pool depositors in Liquity v2 (aka “Earners”) will receive a majority of the interest paid by the borrowers (in BOLD) of the respective borrow market, making it the primary source of yield. Multiple Stability Pools in v2 Unlike Liquity v1 with ETH as its sole collateral asset, Liquity v2 incorporates multiple Stability Pools, one for each collateral type (LSTs / ETH). Every collateral thus forms a separate borrow market with its own set of borrowers and a corresponding Stability Pool. Collateral risk is contained inside each group of borrowers (no mixing of collateral across borrow markets), while the exposure of depositors is primarily defined by the collateral asset they have opted for. However, as an overcollateralized stablecoin, BOLD ultimately remains dependent on all collateral assets, making collateral risk management particularly important. Liquity v2 introduces several new mechanisms to contain and reduce risk from each collateral: - Separate Stability Pools: the separation into multiple borrow markets and Stability Pools allows the markets to establish their own range of individual interest rates and risk parameters. - An adaptive redemption mechanism: collateral perceived by the market as risky will be preferentially redeemed to ensure the exposure of the system to this collateral type can be reduced. This mechanism will be covered in a separate post. These risk measures will be solely driven by market forces - there will be no need for governance oversight. Adaptive redemptions The protocol’s exposure to each LST will be reflected individually through the ratio between the debt collateralized by the LST and the size of the respective SP backing it. For example, the SP for pure ETH may cover 60% of the ETH-backed loans, while the SP for wstETH may only account for 40% of the wstETH-backed debt. This metric enables the protocol to manage collateral risks in an autonomous way by directing BOLD redemptions towards LSTs with lower SP backing. This mechanism is complemented by the fact that each borrow market will have its own redemption ordering based on the interest rates paid by its borrowers. Economic benefits of LST market segmentation Due to this economic segregation, each market will establish its own range of interest rates reflecting collateral risk, opportunity costs and competition. For example, borrowers are likely to pay higher average interest rates for LST-backed loans than for loans backed by pure ETH. Aside from just being a single stability pool depositor, users could also do more sophisticated strategies like the ones below. The interest rate difference will impact the amount of funds deposited into each Stability Pool, allowing the protocol to converge towards APRs reflecting the exposure to LSTs with different risk characteristics. To sum it up, depositors will have the choice to deposit their $BOLD to several Stability Pools depending on the expected yield and their desired exposure to collateral assets. While some depositors may chase the highest yield, others may, for instance, prefer more established LSTs over smaller cap LSTs. Creating sustainable yield generating opportunities is at the core of Liquity v2. By enshrining attractive Stability Pool yield, but also protocol incentivized liquidity, Liquity v2 aims to deliver predictable and sustainable yield opportunities with BOLD. Check the full article in the link below👇

Earning with BOLD https://t.co/DHpmPjpiBk