Liquity DeFi Launches On Mainnet, LQTY Price Up 900%

The latest decentralized finance protocol launched on Ethereum is Liquity, which offers alternative mechanisms for decentralized borrowing.

In an April 5 announcement, the Liquity Protocol confirmed that it is deployed on the Ethereum mainnet and is now operational. He added that the landmark launch came after a year and a half of research and development.

The decentralized borrowing protocol allows users to receive 0% Ethereum loans that are deposited as collateral. Collateral is low and loans are being paid off in the new dollar-pegged Liquity stablecoin.

Loans paid off in new stablecoin

The protocol aims to address floating interest rate issues that can negatively affect borrowers. He used MakerDAO as an example. MakerDAO is adjusting rates to keep the DAI as close to the dollar as possible.

"The delicate balance of maintaining an asset peg is the reason that many protocols must frequently adjust their interest rate to influence borrower behavior."

It added that floating interest rates can lead to market inefficiency as borrowers do not know how much it will cost to borrow in advance.

Liquity aims to address this issue by allowing DeFi users to borrow ETH-backed loans at 0%. Loans are paid out in a dollar-pegged stablecoin called LUSD, with a minimum collateral ratio of just 110%.

At any time, users can redeem LUSD at par with the underlying ETH collateral. One LUSD is equal to 1 dollar ETH under the protocol.

LUSD stablecoins can also be deposited in the stability pool. Users can then earn ETH and rewards in their own LQTY token. Pool balances will decrease over time due to liquidation. However, the protocol will provide users with a prorated share of the liquidated ETH along with LQTY rewards.

Users can also stake LQTY tokens to earn a share of the borrowing/redemption fees charged by the protocol. The platform does not have a “front end”, so users must choose a third-party app such as Zerion to access it.

On March 30, Liquity announced it had raised $ 6 million in Series A funding led by Pantera Capital. Nima Capital, Alameda Research, AngelDAO invested in the round. It also includes private equity investments from Meltem Demirors, David Hoffmann and Calvin Liu.

The cost of LQTY is skyrocketing

The LQTY token debuted on the market at around $ 9 when it launched on April 5. In less than 24 hours, LQTY climbed to over $ 147 before dropping to around $ 92 at time of publication. This marks a massive 900% growth on the first day.

The cryptographic data provider said there are 42 tokens in circulation out of a maximum of 593 million. This gives LQTY a current market cap of $ 100 million.

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