What is Liquity?

Modified on Thu, 07 Dec 2023 at 06:30 PM

Liquity is a decentralized lending protocol that operates on the Ethereum Blockchain, providing users with zero-interest loans (0% interest) using Ether as collateral, and allowing them to receive loans in LUSD, a stablecoin pegged to the US dollar. Liquity operates in a decentralized manner, and loans are collateralized not only by the underlying collateral but also by the Stability Pool, which consists of LUSD and other borrowers. Liquity is a protocol that is not supervised, not subject to change, and has no central authority, ensuring confidence that the protocol remains decentralized.

Assets with a fixed value are an important component for applications on Ethereum, and the majority are in the form of stablecoins with collateral, such as Tether and USDC, with only a few decentralized stablecoins, such as DAI and sUSD. This means that most stablecoins are pegged to the dollar. Liquity solves this problem by creating an efficient and user-friendly way to borrow stablecoins.


Liquity has a token that powers the protocol called LQTY, with a maximum supply of 100,000,000 tokens. LQTY is not a governance token as it is not governed by any central authority. LQTY holders can stake the token to receive some of the fees generated from opening and closing loans.

Protocol users can receive LQTY as rewards through the following methods:

  1. By staking Ether and borrowing LUSD
    When users borrow LUSD, they must place a certain amount of LQTY tokens as collateral. If the loan is repaid on time, the LQTY tokens placed as collateral will be returned along with the interest earned.

  2. By depositing LQTY into the Liquity Stability Pool
    Stability Pool is a group of LUSD used to maintain the price stability of the stablecoin. Users who participate in the Stability Pool will receive LQTY rewards in proportion to the amount of LUSD they contribute.

  3. By participating in the governance of the protocol
    LQTY holders can vote on proposals related to the protocol and receive a portion of the protocol’s fees generated from account settlements and withdrawals. These fees are paid in a form of an LQTY token.

Founders of Liquity (LQTY)

Robert Lauko and Rick Pardoe founded Liquity (LQTY). Lauko, who holds a Ph.D. in Law, started his career as a research assistant for the DFINITY foundation before embarking on the Liquity project. Pardoe, on the other hand, holds a degree in Physics and Economics and specializes in blockchain development for ETHDevs.com. He is also the head engineer for the Liquity project.

Currently, Liquity is led by CEO Michael Svoboda, who has previously served as a Chief Operating Officer and Managing Director at multiple blockchain companies. Svoboda holds a Ph.D. in Computer Science and Economics.



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