Facebook X (Twitter) LinkedIn Telegram
    • About
    • Advertise
    • Submit Press Release
    • Contact
    Facebook X (Twitter) LinkedIn Telegram
    BlockonomiBlockonomi
    • Prices
      • All Coins
      • Bitcoin Price
      • Ethereum Price
      • Ripple Price
      • EOS Price
      • Litecoin Price
      • Monero Price
      • Binance Coin Price
      • Bitcoin Cash Price
      • Chainlink Price
      • Cardano Price
      • Stellar Price
      • Tron Price
    • Sections
      • All
      • Analysis
      • Bitcoin
      • Ethereum
      • Education
      • Trading
      • Buying
      • DeFi
      • NFTs
      • Metaverse
      • Exchanges
      • Brokers
      • Guides
      • Gaming
      • Privacy
      • Business
      • Finance
      • Fintech
      • Regulation
      • Security
    • Claim Free Crypto!
    • Gamble With Crypto!
    • Easily Buy Crypto!
    Home / About / Advertise / Submit Press Release
    BlockonomiBlockonomi
    DeFi Ethereum

    New Ethereum Lending Project Liquity: Unveils LQTY Stablecoin

    Liquity is being created by a startup of the same name as a DeFi protocol for powering zero-interest loans that don't require high collateral ratio.
    William M. PeasterBy William M. PeasterMay 5, 2020No Comments4 Mins Read
    Telegram Twitter LinkedIn WhatsApp Facebook Email
    Liquity
    Share
    Facebook Twitter LinkedIn Email Telegram WhatsApp

    Stablecoins have been among the biggest stories in the Ethereum ecosystem in 2020. And one of the newest stories in that sector is Liquity, a novel “decentralized borrowing protocol” that will rely on a USD-pegged stablecoin called LQTY.

    Introduced on Monday, May 4th, Liquity is being created by a startup of the same name as a DeFi protocol for powering zero-interest loans that don’t require high collateral ratio.

    The protocol is still in-progress, but these planned elements will make the project stand out from reigning DeFi lending dApps like Maker and Compound.

    For one, the role of interest rates are significant in these projects, and Maker and Compound both require borrowers maintain a minimum collateralization ratio of 150%.
    Liquity will be unique, then, in having much less collateral demands for its version of Maker vaults, dubbed “troves.” The Liquity team said:

    “Each trove is required to have a minimum collateralization ratio of only 110%, which is unparalleled in DeFi space. The borrower can then mint LQTY tokens, which are calculated as a debt against collateral. For Ether that is worth $100, the borrower can obtain up to 90.09 LQTY. When the borrower is ready to retrieve their collateral, they simply return the LQTY to the contract to repay their loan and free up their collateral.”

    For now, the protocol isn’t ready just yet for the limelight as the Liquity team still has an “internal version running on … testnets,” but its launch is now on the horizon and its possibilities are interesting.

    LQTY Is Light on Governance

    Table of Contents

    • LQTY Is Light on Governance
    • Understanding the Stability Pool

    Maker and Compound respectively rely on MKR and COMP, governance tokens that the dApps’ communities use to maintain and steer the projects. Yet governance is difficult in traditional settings just as it is on-chain, so these token voting systems face their share of expected and novel challenges.

    Not everything in life needs to be structurally conservative, but minimizing governance where possible can offer unique advantages. In this vein, Liquity is taking the “governance-free” approach when it comes to managing the protocol and LQTY.

    “Price stability does not rely on human governance, but is achieved through protocol incentives and algorithmically adjusted redemption and loan issuance fees (0% by default),” the project’s landing page explains.

    While the system’s precise model is still yet to be seen in the wild, it will surely be attractive to Ethereum stakeholders who have expressed dissatisfaction with recent Maker and Compound governance decisions, e.g. MakerDAO approving centralized coins like USDC and WBTC as collateral and Compound voters embracing Tether (USDT).

    To this end, Liquity’s development is also notably coinciding with the development of MetaCoin, a “governance-minimized” MakerDAO alternative that was first proposed back in February. Minimum viable stablecoin efforts are seemingly becoming more popular, it would seem, so Liquity is likely just the latest of more to come.

    Understanding the Stability Pool

    At times, Liquity loans will need to be liquidated to ensure their don’t collateralization ratios don’t plunge below the key 100% mark. To facilitate this process, the protocol will rely on a so-called Stability Pool:

    “It is maintained by users who deposit LQTY in exchange for the future collateral of liquidated troves. When a trove falls below the minimum collateral ratio of 110%, the system liquidates its debt by burning an identical amount of LQTY tokens held in a Stability Pool … In return for the LQTY that is burned from the Stability Pool, all the collateral of each liquidated trove is sent to the Stability Pool and distributed proportionally among all depositors.”

    Accordingly, if all goes to plan the project’s Stability Pool will provide yield seekers in the DeFi ecosystem with yet another new on-chain avenue to potentially accrue passive income.

    Advertise Here
    William M. Peaster
    • Website
    • X (Twitter)
    • Instagram
    • LinkedIn

    William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

    Related Posts

    Ethereum ETH Price Primed to Erupt: On-Chain Data Hints at 2024 Supply Shock

    December 8, 2023

    Sleeping Crypto Giant Awakens: ETH Whale Moves $90M to Kraken

    December 5, 2023

    Mantle Rolls Out Non-Custodial Liquid ETH Staking to Disrupt Status Quo

    December 4, 2023

    Comments are closed.

    Coinbase Earn
    Advertise Here
    Gambling
    • mBit Casino
      VisitReview
    • BC Game
      VisitReview
    • Duelbits
      VisitReview
    • BitcoinCasino
      VisitReview
    • FortuneJack
      VisitReview
    • 1xBit
      VisitReview
    Exchanges
    • KuCoin
      VisitReview
    • Coinbase
      VisitReview
    • Binance
      VisitReview
    • PrimeXBT
      VisitReview
    Koinly
    Advertise Here
    Trading Bots
    • 3Commas
      VisitReview
    • Cryptohopper
      VisitReview
    • CoinRule
      VisitReview
    3commas Trading Bot
    Advertise Here
    All content on Blockonomi.com is provided solely for informational purposes, and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, product, service or investment. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate.
    Blockonomi™ Copyright © 2017 - 2023 Kooc Media Ltd. All rights reserved. Registered Company No.05695741
    Network: Moneycheck - Finance News / Beanstalk - NFT & Metaverse News
    • About
    • Contact
    • Deals
    • Advertise
    • Privacy Policy
    • Terms & Conditions

    Type above and press Enter to search. Press Esc to cancel.