In the DeFi world, liquidity is like blood in body veins, circulating through blockchain ecosystems and protocols. Lending is one of the main components in the DeFi space that significantly contributes tons of liquidity. Since its LQTY token launch in April 2021, Liquity has been a remarkable example of doing business differently from tradition.
The article below will provide all the detailed information about Liquity, including:
- What is Liquity? How does it work?
- All the detailed information about LQTY Tokenomics and how to get, buy LQTY tokens.
- Roadmap, updates, team, investors, and partners.
- Is Liquity a good investment?
Let’s find out together!
What is Liquity?
Liquity is a decentralized borrowing protocol running on the Ethereum blockchain that uses Ethereum (ETH) as collateral to lend LUSD (a USD-pegged stablecoin). The loan is interest-free and requires a minimum collateral ratio of 110%.
How does Liquity work?
Liquity allows users to borrow LUSD against ETH without having to sell the ETH collateral, and they have to repay the loan in the future. ETH is the only collateral type of crypto asset supported by Liquity.
A Trove is a Collateral Debt Position (CDP) where users can interact with their loans. It has two balances: ETH is collateral, and LUSD is the debt that can be changed by adding more collateral or repaying debt. Users can close the Trove by paying off the debt.
Stability Pool helps to maintain the stability of the Liquity protocol by repaying the debt of liquidated Troves. A trove is liquidated when the collateral is below 110%. As a result, all collateral of the liquidated Trove is transferred to the Stability Pool in return.
Stability Providers who provide LUSD tokens in the Stability Pool can benefit from liquidation and receive early adopter rewards in LQTY tokens. Therefore, this is a safe position for users whenever the market volatility is extremely high.
Frontend Operators run a web interface built by Liquity’s frontend SDK oriented to end-users, which allows them to interact with the Liquity protocol. Therefore, they can earn LQTY rewards and share a portion of their “kickbacks” to Stability Providers. It is a huge incentive for any third-party organization or individual with LUSD tokens or technical understanding to become a Frontend Operator.
What is LQTY Token?
Liquity issues two types of tokens: LQTY, a utility token, and LUSD, a USD pegged stablecoin.
- LQTY is not a governance token, created by the protocol to incentivize users. All LQTY tokens were minted at the genesis for gradual distribution.
- LUSD is a redeemable USD-pegged stablecoin issued by the Liquity protocol. Loans on the Liquity protocol are paid out in LUSD, and the Stability Pool secures them.
Detailed information about LQTY Token
LQTY Price Today
Currently, you can track the price of LQTY on Coin98 Markets.
Coin98 Markets is a website that helps users to get updates of the real-time prices, as well as view the detailed information of a Token Metric from any project. More specifically, you can access the home page or the community page of a project or filter the coins/tokens by Market Cap, Trading Volume, etc.
LQTY Key Metrics
- Token Name: LQTY Token.
- Ticker: LQTY.
- Blockchain: Ethereum.
- Token Standard: ERC20.
- Contract: 0x6dea81c8171d0ba574754ef6f8b412f2ed88c54d.
- Token Type: Utility.
- Max Supply: 100,000,000 LQTY.
- Circulating Supply: 9,985,344 LQTY.
LQTY Token Allocation
The LQTY Token has a total max supply of 100,000,000 tokens distributed as follows:
- Investors: 33.9%.
- Rewards: 32%.
- Team and advisors: 23.7%.
- Liquity AG endowment: 6.1%.
- Community reserve: 2%.
- LP Rewards: 1.3%.
- Service providers: 1%.
LQTY Token Sale
- Liquity raised $2.4M led by PolyChain Captial.
- Liquity raised $6M in Series A Funding in March 2021.
LQTY Token Release Schedule
All 100,000,000 LQTY will be minted at the genesis and will be distributed as follows:
Liquity Community - 35.3%
- 32,000,000 LQTY will be allocated to the LQTY rewards pool. These tokens are earned through Stability Pool deposits and will be rewarded by the protocol to Frontends and Stability Providers.
- 1,333,333 LQTY will be allocated to Liquidity Providers in the LUSD:ETH Uniswap pool. Those tokens will be distributed by the protocol over the course of 6 weeks.
- 2,000,000 LQTY will be allocated in the form of a Community Reserve. These tokens are reserved for the Liquity AG endowment and will be used to fund grants, hackathons, community events.
Team and Advisors - 23.7%
- 23,664,633 LQTY have been allocated to current (and future) Liquity AG employees and advisors.
- All LQTY in this category are under a one-year lockup and are 1/4 vested after 1 year of engagement, then 1/36 monthly after.
Investors - 33.9%: 33,902,679 LQTY have been allocated in a one-year lockup to Liquity’s early investors, who supported our vision and provided the runway necessary for us to succeed long term.
Liquity AG Endowment - 6.1%: 6,063,988 LQTY have been allocated in a one-year lockup to Liquity AG for use by the company.
Service Providers - 1%: 1,035,367 LQTY have been allocated in a one-year lockup to service providers who helped Liquity in various ways before launch.
LQTY Token Use Case
On the Liquity lending platform, there are lots of ways to earn LQTY, and users can take advantage of LQTY in multiple ways as follows:
Staking: LQTY holders can deposit LQTY to the Liquity staking contract to earn transaction fees equal to their staked LQTY share. Alternatively, LUSD holders can deposit into the Stability Pool instead.
Rewards: Frontend Operators and users are motivated to participate in Stable Pools to earn LQTY tokens.
How to get LQTY Token
You can get LQTY by buying on multiple decentralized exchanges: Uniswap, Sushiswap, etc.
Instead of buying on different exchanges, LQTY tokens can be earned in several ways:
- Depositing LUSD into the Stability Pool.
- Facilitating Stability Pool deposits by becoming Frontend Operators.
- Providing liquidity to the LUSD:ETH Uniswap pool (ended).
How to buy LQTY tokens on Coin98 Exchange
Step 1: Connect Coin98 Extension Wallet.
Step 2: Select Uniswap.
Step 3: Choose coins/tokens for trading:
- Search LQTY.
- If the result does not come up, you can paste the contract of LQTY into the search box: 0x6dea81c8171d0ba574754ef6f8b412f2ed88c54d;
Step 4: Adjust the amount you want to swap.
Step 5: Adjust the gas fee, then click Approve.
Roadmap & Updates
Team, investors and partners
Liquity’s Founder and Co-Founder are experts in their fields. Robert Lauko previously worked at DFINITY - a multi-billion dollar project in the blockchain industry. All the information of the Liquity team is openly public on the internet.
Liquity trusts Chainlink for price-feed data because Chainlink is the biggest oracle company in the crypto space.
Is Liquity (LQTY) a good investment?
Currently, Liquity is on its way to being the top lending project not only in the Ethereum ecosystem but also in the crypto space. To achieve that ambition, The Liquity team is constantly optimizing the protocol. There are some notable highlights from Coin98 for investment considerations:
Liquity's minimum collateral of 110% is a competitive number compared to Maker’s minimum collateral of 150%. So Liquity offers better capital efficiency, but there is a potential risk of liquidation because of the 110% collateral ratio. ETH tokens have high volatility so the 110% collateral ratio can be greatly oscillating. Therefore, the number 110% can be leveraged as a means of marketing.
Liquity provides an SDK technical platform for developers to build their own Liquity Frontend and integrate with its services, which is an outstanding incentive idea. It motivates users through token rewards to build up a united network where Liquity is the center.
Liquity’s USD pegged stablecoin LUSD is the critical metric to measure the expanding speed. With over $600M, LUSD tokens are minted by the Liquity protocol showing that it is still small compared to other stablecoins such as MakerDao with $6B DAI tokens. However, with a lending protocol, Liquity is doing great with a solid administration.
After its launch, Liquity attracted lots of attention when the TVL was about $5B. Then the pace seemed to slow down, and now its TVL is in a stable range of $3B, indicating that Liquidity Providers are persuaded to remain in the protocol. Therefore, it’s worth following Liquity’s next actions to boost its position in the lending space.
From my perspective, Liquity needs to launch some incentives to ignite the popularity. And as usual, whether it is worth investing or not, Do Your Own Research before buying and be responsible for your investment.
Liquity is a mid-size project built on the Ethereum blockchain, so it also has numerous competitively large projects on other blockchain platforms, namely:
- MakerDAO: The Maker protocol on the Ethereum blockchain issues DAI USD-pegged stablecoin enabling DeFi products such as trading and lending with over $6B in TVL.
- Venus: A decentralized marketplace built on BSC for connecting Lenders and Borrowers with stablecoins.
- Fluity: A seemingly fork of Liquity on BSC offers users interest-free loans, high capital efficiency, and decentralized stablecoins.
As the DeFi world is growing rapidly, Liquity is proving to be a potential project in the crypto space when doing differently from others. Inevitably, it has the limitations of the Ethereum blockchain, which is a drawback.
Although many other existing lending projects are giants, Liquity is believed to bear fruit with an innovative business. And that is all you need to know about Liquity and its LQTY token. I hope you’ve gained helpful insight to understand the potential behind Liquity.