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Liquity

Lending

Liquity is a decentralized borrowing protocol on Ethereum that lets users mint stablecoins by depositing ETH or liquid staking tokens. Its main stablecoin, BOLD, is backed by ETH and LSTs, while LUSD remains purely ETH-backed for those avoiding LST exposure. Users can borrow, leverage ETH, earn yield on BOLD, and stake LQTY for rewards.

Risk Rating
Best
Protocol Code Quality
Protocol Maturity
Protocol Design
What is Liquity?
What we like
Liquity is a decentralized borrowing protocol with immutable contracts and no governance, issuing LUSD (pure ETH-backed) and BOLD (ETH and LST-backed) stablecoins. Loans are highly capital efficient and free from TradFi exposure.
What we like less
Borrowing relies on volatile assets (ETH and LSTs), making positions vulnerable to liquidations. BOLD holders also inherit risks across all supported collaterals.
What it means for you
Liquity offers decentralized stablecoin borrowing where users can set their own costs and avoid governance risk. Depositors earn sustainable yield from real borrower interest and liquidations.
Information
Exploit/Hacks
One
Info
  • Website
  • Token: LQTY
  • Tags: Lending
Key Metrics
  • TVL: $377.4M (Rank #66)
  • TVL Ranking by Lending: #0
  • Blockchain: Ethereum
  • Chain TVL
    • Ethereum: $377.36M
Risk Assessment
Best
Protocol Code Quality
  • Code reviewed by several experienced auditors including Trail of Bits and CertiK
  • Public team promotes accountability
  • One mitigated protocol hack since launch
Protocol Maturity
  • Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 5% by total value locked reduces risk
  • Core contracts are fully immutable
  • No governance token and/or contracts are fully immutable
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • Isolated markets enable asset risks to be contained to each individual pool without impacting the entire protocol
  • Robust controls in place to prevent risky borrowing
  • Solid mechanisms in place to ensure healthy liquidations
  • Robust methods to accrue protocol reserves
  • Liquity is a Maker-like protocol that offers interest-free loans paid out in LUSD stablecoin with ETH the only accepted collateral asset; borrowers need to maintain a minimum collateral ratio of 110% to avoid liquidation
Things to know about Liquity

What is Liquity?

Liquity is a decentralized borrowing protocol that lets users deposit ETH or select LSTs as collateral and mint a stablecoin (LUSD or BOLD). It is designed to be fully immutable, governance-free, and censorship-resistant, making it one of the most resilient stablecoin issuers in DeFi. Liquity has become known for its security and decentralization guarantees, offering users predictable rules with no hidden levers.

How Liquity makes money

Liquity earns from small one-time borrowing fees on LUSD loans, ongoing interest set by borrowers themselves for BOLD loans, and redemption fees when stablecoins are exchanged back into collateral. A portion of this revenue flows to Stability Pool depositors and liquidity incentives, while liquidation penalties further strengthen solvency.

How you make money on Liquity

Users can earn in three ways: depositing BOLD into Stability Pools to capture borrower interest and liquidation gains, supplying liquidity in incentivized pools via the Protocol-Incentivized Liquidity mechanism, or staking LQTY to earn ongoing revenue from V1 and direct incentives in V2. Yields are sustainable because they come from actual borrower payments, though they carry risks tied to collateral volatility, redemption exposure, and market demand for borrowing.