January 21, 2021
An essential part of the Liquity ecosystem will be what what we call frontend operators. Frontend operators provide a web interface to the end-user, connecting them to the Liquity protocol and receiving LQTY rewards in return. This is a different approach relative to other DeFi protocols because we (Liquity AG) are not running our own frontend.
As we near our Ethereum main net launch, we wanted to provide some insight into why we’ve made this decision and how it will work.
Our primary focus is launching Liquity as a protocol while maximizing decentralization and censorship resistance.
The first way we’re applying this philosophy is by launching Liquity with no governance, and no admin keys. The second way we’re applying this philosophy is on the application layer. Simply put: If there’s only one frontend — run and maintained by us — it’s easy to shut down convenient access to Liquity. With many frontends — run by our ecosystem — access to Liquity becomes more resilient in terms of decentralization and censorship resistance.
If you want to run a frontend, you don’t need to ask permission. There’s no applications and no gatekeepers.
To make this process easier for frontend operators, we’re building out a Launch Kit that will allow anyone to launch their own frontend. It’ll be as simple as downloading the kit, filling in a few parameters, and hosting the interface.
We’ll also be releasing technical documentation (SDK) and a middleware library. These resources will make it easier for operators to build their frontend from scratch or integrate Liquity into their existing stack.
The Launch Kit, SDK, and middleware library are still being finalized, but you can expect more from us in the next month or so.
Don’t worry, we know that incentives are important. They’re especially important when it comes to technical overhead, development time, integration costs, user acquisition efforts, etc. That’s why we built Liquity with incentives in mind.
The protocol pays out LQTY rewards pro rata to users who deposit LUSD into the Stability Pool. Frontend operators can receive part of these rewards by tagging Stability Pool deposits facilitated by their interface and specifying the percentage of LQTY to “kickback” to their users. For example: By setting a kickback rate of 80%, a frontend will earn 20% of the rewards earned by its users.
We expect this to be a competitive opportunity between frontends. Frontends with simple features might provide a higher kickbate rate, while frontends with advanced features might offer a lower rate. It’s important to consider your kickback rate early on as it will not be possible to easily change your kickback rate.
As mentioned earlier, we are still finalizing our launch kit, middleware, and frontend documentation. But, if you’re here early and interested in running your own frontend, we recommend experimenting with our developer / test net UI and looking around at the packages available in our Github repository. This will provide you with a solid foundation by the time our other resources go live.
If you have questions or just want to get involved with the community, join our Discord and introduce yourself!