Liquity's efficient liquidation mechanism allows users to get the most liquidity for their ETH. *Under normal operation.
Liquity charges a small, one-time fee to borrow LUSD instead of highly variable interest rates.
Borrow LUSD, a fully backed stablecoin pegged to the US Dollar that's maintained by an algorithmic monetary policy.
Liquity is a decentralized borrowing protocol that allows you to draw 0% interest loans against Ether used as collateral. Loans are paid out in LUSD - a USD pegged stablecoin, and need to maintain a minimum collateral ratio of only 110%.
In addition to the collateral, the loans are secured by a Stability Pool containing LUSD and by fellow borrowers collectively acting as guarantors of last resort. Learn more about these mechanisms under Liquidations.
Liquity as a protocol is non-custodial, immutable and governance-free.
You first need to choose a web interface (aka frontend) to access the system. The core team building the protocol will not operate a frontend. Liquity is instead accessed by third-party frontend applications and integration services.
You can find a list of frontends here.
Liquity offers the best borrowing conditions on the market with the main benefits being:
- 0% interest rate
- A collateral ratio of just 110%
- Governance free - all operations are algorithmic and fully automated
- Directly redeemable - LUSD can be redeemed at face value for the underlying collateral, always and at any time
- Censorship resistant - the protocol is controlled by nobody
There are basically two different ways to generate revenue using Liquity:
1. Deposit LUSD to the Stability Pool and earn liquidation gains and LQTY rewards
2. Stake LQTY and earn the revenue from issuance fees (in LUSD) and redemption fees (in ETH)
Frontend Operators provide a web interface to the end-user enabling them to interact with the Liquity protocol. For that service, they will be rewarded with a share of the LQTY tokens their users generate.
LQTY rewards are being awarded to Stability Pool depositors and then proportionally shared between the users themselves and the Frontend Operator. How much each party gets is determined by the kickback rate which is set by the Frontend Operator and can range between 0% and 100%.
Setting a high Kickback Rate will make the Frontend Operator attractive to users, but offering a nice interface and additional functionalities might allow for a lower kickback rate while still garnering user interest.
The entire website is of purely informational nature, intended to educate users about the usage and provide background information on the Liquity Protocol.
Once deployed, the protocol will work autonomously and its developer (Liquity AG) will have no influence on its technical functionalities.
Any use of we, our etc. within the website or the accompanying documentation is referring to the Liquity Protocol as deployed and not to Liquity AG.