Liquity Price

What Is Liquity?

Liquity is a decentralized protocol that enables people to take interest-free loans using Ether as collateral. These loans are paid out in Liquity USD stablecoin (LUSD), which is pegged to the U.S. dollar.

When borrowing, users must maintain a minimum loan-to-collateral ratio of 110%. The loans are further secured by a Stability Pool containing LUSD and other borrowers acting as guarantors of last resort. The minimum loan size on Liquity is 2,000 LUSD, for which users are obliged to pay a loan creation fee but not the interest rate. 

LUSD, a stablecoin, and LQTY, an ERC-20 native utility token, are the two important components of the network. Since LUSD is pegged to the U.S. dollar and is used to pay out loans, it can be redeemed at face value against the underlying collateral at any time. LQTY, on the other hand, captures the fee revenue generated by the system. It incentivizes early adopters to stake on the Liquity platform and frontend operators to secure the network. LQTY has a total supply cap of 100,000,000 tokens.

By creating a decentralized borrowing protocol, Liquity aims to increase the adoption of decentralized stablecoins and ensure that its protocol remains decentralized.

The Founding Team of Liquity

The Liquity protocol’s team of developers is led by Robert Lauko, who is also the CEO of the project. Other members of the founding team include Rick Pardoe, the project's lead engineer, and CEO Michael Svoboda, who has previously served as CEO of multiple blockchain companies.

These individuals were the core contributors in developing the Liquity Protocol's smart contracts. Since the project's inception, the team has expanded to include additional developers, advisors, engineers, strategists and community managers.

What Are LQTY Tokens Used For?

LQTY is a utility token of the Liquity protocol. It’s used to incentivize early adopters of the platform and maintain the integrity and sustainability of the Liquity protocol. Only Stability Providers (users who’ve deposited LUSD in the Stability Pool) can earn LQTY rewards.

LQTY is also used as collateral to borrow LUSD, the stablecoin issued by Liquity. When users borrow LUSD using LQTY as collateral, they must maintain a minimum collateralization ratio to avoid liquidation. If the value of your LQTY collateral falls below a certain threshold, the position is automatically liquidated by the protocol to protect the system's stability.

Overall, LQTY is an essential part of the Liquity protocol, serving its utility and as a form of collateral for borrowing LUSD.

What Makes LQTY Coin Unique?

Following are some of the key benefits of holding LQTY coins:

• Users can borrow a loan at a 0% interest rate, meaning there’s no need to worry about accruing debt over time.

• The minimum collateral ratio of 110% allows deposited ETH to be used more efficiently. Accordingly, borrowers get more value from their collateral.

• The protocol is governance-free. This means that all operations are fully automated and the protocol parameters are set during contract deployment.

• LUSD can be redeemed at face value for the underlying collateral at any time.

• Liquity crypto is fully decentralized. The contracts have no admin keys and are accessible through multiple interfaces hosted by different Frontend Operators. This makes the protocol censorship-resistant and highly resilient to any protocol infiltration.

Advantages and Disadvantages of Liquity

Despite its shortcomings, Liquity offers a range of benefits for borrowers and lenders alike, including stability, low fees, noncustodial security and decentralized governance. Here's what to expect from Liquity.

Advantages

Stability: Unlike other lending platforms, Liquity's interest rate is stable and predictable. The platform uses a Stability Pool to ensure that the interest rate remains low and constant, making it easier for borrowers to plan their repayments.

Noncustodial: Liquity is a noncustodial platform, meaning that users always retain control of their funds. This reduces the risk of hacking and theft and gives users greater security and peace of mind.

Disadvantages

Limited Asset Support: Liquity supports only a limited number of cryptocurrencies, which means that users may not be able to borrow against all of their assets.

LQTY Coin Price and Tokenomics

The total supply of LQTY is 100,000,000. Of these, almost 91% of LQTY are in circulation. Following is an overview of the proceeds:

• Investors: 33.9%

• Community: 33.3%

• Team and Advisors: 23.7%

• Liquity AG Endowment: 6.1%

• Community Reserve: 2%

• Service Providers: 1%

Since Jan 2023, the LQTY coin’s price has increased from $0.50 to over $2. While the price rise is mainly attributed to the overall uptrend in the crypto market, the price is still highly reliant on the protocol projections, its utility, and its adoption with institutions and the public.