Liquity USD(LUSD)
A decentralized borrowing protocol enabling users to borrow the USD stablecoin BOLD against ETH and staked ETH with user-set interest rates.
Overview
Liquity V2 is a decentralized finance (DeFi) protocol that allows users to borrow the USD-pegged stablecoin BOLD by collateralizing Ethereum (ETH) and liquid staking tokens (LSTs) such as wstETH and rETH. Building on the original Liquity V1 protocol, V2 introduces user-set interest rates, enabling borrowers to fix or adjust their borrowing costs dynamically. This feature enhances capital efficiency and predictability, allowing users to tailor their debt positions to market conditions. Liquity V2 is fully on-chain and immutable, ensuring no governance or admin intervention can alter the protocol, which increases security and user trust.
The protocol supports borrowing up to 91% loan-to-value (LTV) against ETH and staked ETH, with a new redemption mechanism that is decoupled from LTV and features lower liquidation penalties. Liquity V2 issues BOLD, a crypto-backed stablecoin designed for resilience and sustainability, redeemable directly for protocol collateral without reliance on off-chain assets or centralized custody. Users can also increase their exposure to ETH and staking yields through automated looping strategies, borrow at self-selected rates, and earn yield by depositing BOLD into stability pools or providing liquidity on incentivized decentralized exchanges.
Liquity V2 does not operate its own frontend; instead, it relies on a community of independent frontend operators such as Liquity.App, DeFi Saver, and LQTY.IO. This decentralized frontend ecosystem aligns with Liquity’s ethos of user empowerment and minimal dependencies. The protocol also offers staking of LQTY tokens, which grants governance influence over liquidity incentives and rewards from both Liquity V1 and V2. Liquity V2’s architecture and features make it suitable for DeFi developers, financial institutions seeking decentralized stablecoin exposure, and infrastructure developers interested in integrating or building on a robust borrowing protocol. Comprehensive documentation and community support are available to facilitate onboarding and integration.
The Problem
Borrowers in DeFi often face unpredictable and inflexible interest rates, limited collateral options, and risks from protocol upgrades or governance changes. Stablecoins frequently rely on off-chain assets or centralized custody, reducing transparency and resilience.
The Solution
Key Features
BOLD Stablecoin
A USD-pegged, over-collateralized stablecoin backed solely by crypto assets, redeemable directly for collateral.
Automated Looping for Increased Exposure
One-click leverage to borrow BOLD and buy more collateral, increasing ETH exposure and staking yield.
Decentralized Frontend Ecosystem
Multiple independent frontends provide access, aligning with the protocol’s decentralized philosophy.
Key Strengths
How Developers Use Liquity USD(LUSD)
Borrowing Stablecoins Against ETH and Staked ETH
Developers and users can borrow BOLD stablecoins by collateralizing ETH or liquid staking tokens with flexible interest rates.
Leveraged Exposure to ETH Staking Yields
Users can automate leverage strategies to increase their exposure to ETH and its staking rewards using the protocol’s multiply feature.
Earning Yield by Providing Liquidity and Staking
Liquidity providers and stakers earn sustainable yields from protocol revenues and incentives by depositing BOLD or staking LQTY tokens.
Works Well WithEthereum
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Pricing
Free | |
|---|---|
| Price (Monthly) | Free |
| Price (Annual) | Free |
| Messaging | N/A |
| Support | Community support via Discord and documentation |
| Analytics |
Resources
Liquity provides comprehensive documentation, a detailed whitepaper, community support channels, and a blog with updates and technical insights to help developers and users understand and integrate the protocol.