In fact, DAI is not a completely decentralized Stablecoin because it can be collateralized with USDC and USDT is a centralized Stablecoin. Previously, we had UST, a Stablecoin that met all the requirements for decentralization, but the operating model was not sustainable so it collapsed.
With Stablecoins, MakerDAO’s mechanism is still the most effective model in the DeFi space. Also works according to the same mechanism and only uses ETH assets to create complete decentralization for Stablecoin. The project I want to mention is Liquity Protocol.
What is Liquity Protocol? Liquity Protocol is a CDP protocol, allowing users to collateralize ETH to borrow LUSD. LUSD is a Stablecoin worth 1 USD, the lowest guaranteed rate of LUSD is 110%. So what is Liquity Protocol? How does it work? Let’s find out in this article!
To understand more about Liquity Protocol, you can read the following articles:
- MakerDAO (MKR) Operating Model
- What is Venus Protocol (XVS)? Venus Protocol Cryptocurrency Overview
What is Liquity Protocol?
Overview of Liquity Protocol
Liquity Protocol is a CDP protocol, allowing users to collateralize ETH to borrow LUSD. LUSD is a Stablecoin pegged to USD, the lowest guaranteed rate of LUSD is 110%. Built and developed on Ethereum, the project is only supporting the Ethereum network.
In essence, Liquity is a protocol that provides lending services. Instead of mortgaging ETH to borrow many types of assets as usual, here users can only borrow LUSD, also known as Mint LUSD. In addition, liquidation issues take place exactly like other lending platforms.
The Liquity Protocol difference
The sole collateral is ETH to Mint LUSD, making Liquity the market’s leading decentralized CDP protocol. And more specifically, borrowers on Liquity will not have to pay interest but must pay a loan fee from 0.5% to 5% for each loan order.
Mechanism of action
Liquity will liquidate all loans with a collateral-to-loan asset ratio of 110%. It is best to maintain a ratio of 150% or higher.
Development Roadmap
Liquity has released a number of notable updates such as:
- July 28, 2023: Liquity is limited in expansion if it only accepts ETH as collateral, so the development team introduced V2 version to the community. To understand more about Liquity V2, people can refer to the article Liquity V2: LUSD Will Become a Serious Competitor to DAI, GHO & crvUSD.
Core Team
Rick Pardoe: Co-founder and Core Developer
- Rick successfully obtained a Bachelor’s degree in Physics at the University of Bristol in 2005, then continued to study further and successfully obtained a Master’s degree in Economics at the University of Nottingham.
- After graduating, Rick worked as an SEO consultant and website producer. Has developed dozens of websites with rich content in many different fields.
- In 2017, Rick became a Blockchain developer at ETHDevs.com. As a developer of the Solidity blockchain on Ethereum. Build smart contracts and dApps, focusing on security best practices.
- In 2019, he and his colleagues founded Liquity and became the main developer of the project.
Investors
- September 25, 2020: Seed round successfully raised $2.4M led by Polychain Capital with the participation of a number of other funds such as 1kx, a_capital, Lemniscap, DFINITY Ecosystem Fund, Robert Leshner, Alexander Pack.
- March 30, 2021: Successfully raised $6M Series A round led by Pantera, with participation from a number of funds such as IOSG, AngelDAO, Nima Capital, Greenfield One, Meltem Demirors, Calvin Liu, George Lambeth, Bo Shen, Alameda Research.
Tokenomics
Overview information about Token Liquity
- Token Name: Liquity
- Ticker: LQTY
- Blockchain: Ethereum
- Standard: ERC-20
- Contract: 0x6dea81c8171d0ba574754ef6f8b412f2ed88c54d
- Total supply: 100,000,000
- Maximum supply: 100,000,000
Token Allcation
- Service Provider-1%: 1,035,367 LQTY has been allocated to service providers who have helped Liquity in various ways prior to launch.
- Community Reserve-2%: 2,000,000 LQTY will be allocated as community reserve.
- Endowment-6.1%: 6,063,988 LQTY allocated to Liquity AG for company use.
- Team and Advisors-23.7%: 23,664,633 LQTY have been allocated to current employees and advisors.
- Community-33.3: 32,000,000 LQTY will be allocated to the reward pool, 1,333,333 LQTY will be allocated to LPs of the LUSD/ETH Uniswap pool.
- Investors-33.9%: 33,902,679 LQTY has been allocated to Liquity’s initial investors who back and support the project.
Token Use Case
LQTY Token holders will participate in protocol governance and share revenue.
Exchanges
LQTY tokens are traded on many major exchanges such as Binance, Coinbase, Kucoin,…
Information Channel of Liquity Protocol
- Website: https://www.liquity.org/
- Twitter: https://twitter.com/LiquityProtocol
- Discord:
Summary
Liquity Protocol is the most decentralized CDP protocol in DeFi. Users can borrow LUSD at zero interest rates, competing directly with the major platform in the industry, MakerDAO.
So I have clarified what Liquity Protocol is? Overview of the Liquity Protocol cryptocurrency. Hope this article brings you a lot of useful knowledge!