Liquity (LQTY) is a decentralized borrowing protocol operating on the Ethereum blockchain, enabling users to take out 0% interest loans against Ether (ETH) as collateral. These loans are paid out in LUSD, a USD-pegged stablecoin. A notable feature of Liquity is its low collateral ratio of only 110%, coupled with a small, one-time fee for borrowing LUSD instead of a fluctuating interest rate. This protocol is designed to be immutable, non-custodial, and governance-free, emphasizing efficiency and decentralization.
LQTY, the protocol's secondary token, rewards Stability Providers and incentivizes Frontend Operators and early adopters. Users earn LQTY by depositing LUSD into the Stability Pool, which also serves as a mechanism for securing loans against ETH price fluctuations. Furthermore, staking LQTY allows users to earn a share of the fees generated from loan issuances and LUSD redemptions, with no minimum lockup period required for rewards.
In the first quarter of 2023, Liquity expanded its ecosystem to include Layer-2 solutions like Optimism and Arbitrum, enhancing its offerings with faster and cheaper transactions. This strategic move not only broadens the reach of Liquity's stablecoin, LUSD, but also showcases the protocol's commitment to embracing advancements in blockchain technology to meet the demands of its growing user base.
This expansion saw significant developments, such as integration with Sonne Finance on Optimism and a notable presence in the Arbitrum ecosystem, further broadening the usability and accessibility of LUSD and LQTY tokens.
