Liquity

What is Liquity (LQTY)?

To start with, Liquity happens to be a lending protocol within the DeFi (decentralized finance) space in that it allows users to borrow funds against those underlying collateral payments, which, in this case, would be ETH. This can be akin to how banks in the real world enable individuals to borrow funds against tangible collateral, which is usually real estate or money.

Background and Emergence of Liquity

Rick Pardoe and Robert Lauko are responsible for the formation of Liquity. Lauko is also the CEO of Liquity, before which he worked at DFINITY as a researcher. As for Pardoe, he’s the lead engineer and has quite some experience within Solidity. Michael Svoboda is another key member of the Liquity team, where he holds the position of COO, before which he was the CEO and COO of multiple blockchain firms.

The native token of the protocol, i.e., LQTY, along with the whitepaper, were both launched in early 2021.

The Fundamental Problem It Aims to Solve

There are a couple of problems that Liquity aims to solve. But among the more noticeable solutions it offers is how it introduces decentralized borrowing.

With it, one does not need to go through any lengthy or tedious procedure, nor do they have to provide any sort of documentation about how much they earn, whether they’re free of any debts, or even disclose what they own, i.e., things that would be reminiscent of traditional banking. All that they have to do is provide enough collateral; if you can do that, then you are deemed fit to borrow or request a loan.

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What Makes Liquity Unique?

Here, we will be looking at some of the more unique aspects of Liquity, or what makes it stand out from the rest, namely its stability mechanisms, decentralization, and governance.

Algorithmic Stability Mechanisms

Volatility has always been an issue in the world of cryptocurrency. Although it may be great from a certain investment perspective, it can be devastating when it comes to lending or borrowing, as it practically renders the whole endeavor meaningless.

Liquity addresses this through its use of LUSD, its own stablecoin, for which it uses various algorithmic stability mechanisms to maintain its peg to the US dollar, and the stability pool, which we’ll discuss below.

Decentralization and Governance

Unlike what you’ll find on other DeFi protocols, Liquity doesn’t depend on human-centric governance with regards to voting on monetary interventions, making it truly decentralized, or “fully” as it describes itself to be. Therefore, every protocol parameter can either be immutable and preset or algorithmically managed by Liquity itself, rendering human interference redundant.

How Does Liquity Work?

Here, we will be diving a bit deeper into how the Liquity system functions, namely its architecture, stability pool, and borrowing mechanism.

System Architecture

Liquity is comprised of several key components within its architecture. These include frontend operators, the stability pool, the reward pool, and its native tokens, LUSD and LQTY. These frontend operators, for instance, are responsible for running its web interface, and hence, they are needed for linking users to the protocol if they are to borrow or make deposits.

Borrowing Mechanism

The borrowing mechanism of Liquity has been designed to be user-friendly and simple, enabling borrowers to, against Ethereum collateral, draw loans and not concern themselves with high interest rates or complicated repayment structures.

Stability Pool

Its stability pool is essentially where users referred to as “stability providers” may deposit LUSD to secure Liquity’s borrowing mechanism against the volatility or fluctuations in ETH’s price. Stability providers are tasked with depositing LUSD tokens within the stability pool and are thus incentivized to do that, which would be where the reward pool comes into play.

Comparison with Other Decentralized Lending Platforms

In this section, we’ll discuss briefly how Liquity compares to other protocols within the space.

Competitive Advantages of Liquity

The fact that interest-free borrowing and lower collateralized loans are possible here implies that it stands in an advantageous position within the DeFi space, as it’s easier to acquire loans here.

And also because there aren’t that many projects that offer what it is currently providing.

Performance Analysis

In terms of how it has been performing, while it, like the rest, has been largely affected by the bear market, with the LQTY token falling more than 98% from its all-time high in 2021, it has been gaining some momentum lately, with chances of slight chances of substantial recovery.

The Liquity Community

Let’s now direct our attention towards its community, the partnerships it’s made, and what its ecosystem is composed of.

Community Governance

Despite what we mentioned earlier, Liquity has released LiquiFrens, through which LQTY holders will get to vote on user-made proposals, deciding which of them are to be funded. Again, this will have no bearing on monetary interventions, as that’s largely left to code.

Ecosystem and Partnerships

Due to the specificity of what it offers, its ecosystem is mainly centered around two assets, LQTY and LUSD, so you won’t find any decentralized applications here, and as for partnerships, according to its website, it has partnered up with the likes of Polychain Capital, Coinspect, Gauntlet, and more.

LQTY Token

Let’s take a brief look at its native token, LQTY, and what its purpose is within the ecosystem, along with its distribution or allocation.

Utility and Benefits

The underlying purpose of LQTY has always been centered around incentivization by rewarding stability providers and frontend operators for their contributions.

Distribution and Allocation

As far as allocation, 33.3% is allocated to the community, 23.7% to teams and advisors, 33.9% to investors, 6.1% to endowment, 2% to community reserve, and 1% to service providers.

Getting Started with Liquity

Are you looking to get started on Liquity? Let’s see what that might entail below.

Setting Up a Wallet

Like with any DeFi protocol these days, you’ll have to set up or connect your wallet, the instructions for which Liquity will provide, and it won’t take long since they’re quite standard and uncomplicated.

Using the Liquity Interface

Since Liquity doesn’t operate its own frontend, you’ll have to choose one yourself.

In other words, using the protocol entails picking a frontend that suits your needs.

How to Buy LQTY Tokens on Binance

Now, if you’re interested in Liquity’s services and are looking for a way, and an exchange, to buy some LQTY, then let’s see how that may be done on Binance.

Registration and Verification Procedures

To buy on any exchange, you’ll have to register on it first, so click on the link below, which will take you to Binance’s registration page using a special Coin-labs referral code. Fill in what’s required, including standard details such as email address, password, etc.

Following registration, you’ll need to go through KYC as well if you want a hassle-free trading experience. So, go to Binance’s verification page, where you’ll need to add some basic details about your identity, followed by some documentation evidence backing up those details.

Two-factor Authentication: Securing Your Account

Following account verification, it’s recommended to set up 2FA, and that can be done on Binance’s security page. Over there, click the relevant option and follow the instructions outlined by Binance to complete your setup, which will likely include downloading an authenticator application, among some other simple steps.

Funding Your Binance Account

Next comes funding your account, which you can do on the deposit page. Once there, select your token and a supporting network. Following that, paste the deposit address that’ll be generated into the withdrawal field of an external exchange or your wallet.

Making Your First LQTY Purchase

After your deposit has arrived, you can move on to buying some LQTY tokens, which there are plenty of ways to do, such as through its spot, futures, P2P trading pages, or token swapping or converting pages. Pick any option you’d prefer, and place your order.

Withdrawing to a Secure Wallet

After buying those LQTY tokens, you may transfer them to a secure wallet through Binance’s withdrawal page, where you’ll simply have to select the LQTY token, a supported network, specify the amount being withdrawn, and paste your wallet’s address within the withdrawal field. Confirm your transaction and then wait for it to be processed.

Future Outlook for Liquity

What will the future be like for Liquity, especially with regard to its roadmap or upcoming features? Look no further, for we’ll delve briefly into that below.

Upcoming Upgrades and Features

Right now, Liquity is in its v2 phase, which is set to launch two prominent features, including principal protection and secondary markets. Both of these features are centered around further protecting users or their positions from severe market downturns.

Vision and Roadmap

While Liquity doesn’t come with a roadmap like you’ll find on other protocols, its vision has always been to create a more user-friendly and capital-efficient way for users to borrow stablecoins, and any upcoming feature planned out will incorporate such a vision.

Conclusion

Through its zero interest rates and 110% collateralization ratio, coupled with redeemable rewards and liquidity, and more, Liquity may emerge as a decentralized form of borrowing that becomes one of the go-to places for acquiring cryptocurrency loans.

We Coin-Labs.com provides only objective information about Liquity.
Therefore, we are not responsible for the investment decision in Liquity and the resulting loss.

Liquity Basics

Here are some factors that investors should consider before investing in Liquity.

Cryptocurrency Features	Liquity (LQTY)
Publisher or Developers	Rick Pardoe, Robert Lauko
Headquarters (Registration Number)	Zug, Switzerland
Symbol	LQTY
Platform	Ethereum
Published Date (CMC Registration)	2024-12-01
Max Supply	100,000,000 LQTY

Reliability Score of Liquity in 2024

These are indexes mesuring the investment reliability of Liquity conducted by Coin-Labs.com.

Investment Reliability Rating Items	Scores and Current Status
Company Activation Rate	/ 10.0 CAR
Communication Rate	/ 10.0 CR
Technology Transparency Rate	/ 10.0 TTR
Development Participation Rate	/ 10.0 DPR
Listing Status on the World's Top 10 Exchanges	Listed on 6 Exchanges
Number of Available Pairs Worldwide	168 Pairs
Market Cap of the Cryptocurrency	121,392,756 USD (Rank #311)

The table above shows the result of investment suitability evaluation for Liquity.
Check out how we evaluate cryptocurrencies on the crypto rating description page.

Liquity Price

Here are the price and recent trading volume of Liquity. (Data of 2024-12-02 03:40:00)

Price Items	Price and Trading Volume of Liquity
Liquity Price	1.592 USD
Price Change 24h	2.60%
Price Change 7d	19.13%
Trading Volume 24h	30,664,308 USD
Trading Volume Change 24h	8.51%

Cryptocurrency Metadata

You can check the development status and social media information of Liquity through the links in the table below.

Metadata Source	URL
🌎 Official Website
📖 White Paper
🛰️ Source Code (GitHub)
🐦 Twitter
🤖 Reddit
🎺 Message Board

Where to Buy Liquity

Here are the top ten world crypto exchanges where traders can buy Liquity in 2024.

Top10 Exchanges	Listed Status	Page URL
Binance	Listed	https://www.binance.com/en/trade/LQTY_BTC
Coinbase	Listed	https://pro.coinbase.com/trade/LQTY-USD
Kraken	Not listed
KuCoin	Listed	https://www.kucoin.com/trade/LQTY-USDT
Bitfinex	Not listed
OKX	Listed	https://www.okx.com/trade-spot/lqty-usdt
Huobi	Listed	https://www.htx.com/en-us/trade/lqty_usdt?type=spot
Bitstamp	Not listed
Bybit	Not listed
Gate.io	Listed	https://www.gate.io/trade/LQTY_USDT

Frequently Asked Questions