Liquity is a decentralized borrowing protocol that lets users borrow the LUSD stablecoin in exchange for depositing ETH as collateral.
Liquity is a decentralized borrowing protocol that allows borrowers to draw interest-free loans against ETH as collateral. Loans are paid out in LUSD, a USD pegged stablecoin with a minimum collateralization ratio of only 110%. The loans are further secured by a stability pool that contains a portion of the total LUSD supply and by fellow borrowers collectively acting as guarantors of last resort. The stability pool serves as the first line of defense in maintaining system solvency as it is used to liquidate the debt in low-collateralized vaults (Troves). For depositors into the stability pool. it allows them to commit capital in advance to buy liquidated ETH at a discount. In general, stability pool depositors will receive more ETH (in USD terms) than the amount of LUSD burned. This is not without risks as it is still possible for ETH to drop significantly after a liquidation such that it is worth less than the amount of LUSD removed.
Liquity charges a one-time fee whenever users borrow and redeem LUSD. Borrowers incur a fee on loans as a percentage of the total amount (in LUSD) and redeemers incur a fee on the amount paid to users by the system (in ETH) when exchanging LUSD for ETH.
You can generate revenue via two different ways on Liquity. First, you can deposit LUSD to the stability pool to earn liquidation gains (in ETH) and LQTY emission rewards. Second, you can stake the LQTY utility token and earn LUSD and ETH revenue from borrowing and redemption fees.