The crypto space has been offering multiple use cases other than just buying and selling tokens for profit. Similar to other financial institutions, some of the platforms in the crypto industry also offer lending and borrowing facilities. Meanwhile, some of the platforms, like Liquity, enable traders to borrow crypto money without paying an interest rate on the ETH collateral.
Then is the purpose of the loan compromised? Surely NO!
Liquity is a decentralized borrowing protocol offering interest-free collateralized borrowing and DeFi lending. It does so by integrating two tokens, LQTY and LUSD. Users here borrow the LUSD stablecoin by locking Ethereum with a 110% minimum collateral ratio, while they have to pay a one-off borrowing fee.
|Founder||Robert Lauko & Rick Pardoe|
|Token Type||ERC-20 & Governance|
|Circulating Supply||91.39 million|
|Max Supply||100 million|
Liquity was founded by Robert Lauko, who is the current CEO of the platform and worked previously as a research associate with DFINITY. Robert, along with Rick Pardoe, the lead project engineer, founded Liquity after 18 months of constant development. Robert received $8.4 million in funding across three funding rounds led by Pantera Capital and Polychain. Further in October 2022, the platform added another novelty via Chicken bonds, which are a modern and innovative way of classifying risk and redistributing yields from liquity stability pools.
The working of the Liquity platform is completely dependent on its dual tokens, LUSD and LQTY. the platform utilizes the debt positions(CDPs) called as ‘Troves’. Further, the users can deposit LUSD into a stability pool, which is used to absorb any debt from liquidations. Whenever the Troves are liquidated, the LUSD holders within the stability pool receive a part of the locked ETH as collateral, which can be redeemed.
LUSD is the native stablecoin that can be redeemed for Ethereum at any face value at any time. The stablecoin utilizes a soft peg mechanism that ensures USD parity. It implies a state of equilibrium across the protocol and includes borrowing fees on new debts. When LUSD falls below the $1 target, it creates arbitrage opportunities as LUSD is redeemable for $1 worth of ETH. An increase in redemptions decreases the borrowing rate, which in turn helps the moderate supply of LUSD.
LQTY token is used to reward stability providers and also to incentivize front-end developers and early adopters. The users earn rewards and earn a share of fees paid for the issuance of loans & redemptions after depositing LUSD into the stability pool. LQTY requires no minimum lock-up period and the rewards are disturbed on a pro-rata basis.
The platform uses third-party frontend operators to run its interface, which allows the users to connect to liquity and make deposits & take out loans.
The platform is completely decentralized and censorship-resistant. There are no governance proposals to vote on and hence it makes the platform’s monetary policy more robust.
The LUSD tokens are generated by the platform without any capital costs ot interest rates.
|Liquity Price Today||$2.77|
|Price Change <Yearly>||+9.1%|
|Market Rank (as per CMC)||138|
|Market Cap||$252.92 million|
|Fully Diluted Market Cap||$276.72 million|
If you want to buy Liquity in India, just follow the below-mentioned steps,