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 👇

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