Liqwid is a non-custodial liquidity market protocol where users participate directly with the protocol as suppliers or borrowers. Suppliers provide liquidity to a market to earn interest on deposits and borrowers are able to open perpetual loans in an overcollateralized manner.
The Liqwid protocol is built in Cardano’s Plutus smart contract language with a focus on security, performance and software correctness.
The on-chain codebase has undergone a security audit from third-party auditors (Vacuumlabs) prior to mainnet launch. The full audit report has been made publicly accessible following completion and can be viewed on Google drive here.
How do I use the Liqwid protocol?
To utilize the Liqwid protocol, you first supply your preferred Cardano native asset and amount. ADA, DJED and SHEN are currently the only three markets supported on Liqwid mainnet, with support for additional Cardano native assets launching soon.
After providing liquidity, you will earn interest calculated from the market's borrowing demand. Supplying assets also allows you to borrow by using your supplied assets as collateral. The interest you earn on supplied assets reduces the interest rate you accrue on active loans.
What is the cost of using the Liqwid protocol?
Using the protocol requires transactions on the Cardano blockchain so transaction fees for usage, denominated in ADA, which vary based on transaction complexity.
The protocol has been optimized to enable the lowest possible transaction fees for users completing market actions (Supply, Borrow, Repay, Withdraw).
Where are my supplied assets located?
Supplied assets are always stored on-chain in a Plutus smart contract. The on-chain validator code of the smart contract is audited by third-party auditors. You can withdraw your assets from a market at any time or transfer a tokenized (qTokens) version of your supplier position. As fungible Cardano native assets, qTokens can be transferred and traded as ADA or any other Cardano native token.
Is there any risk?
No smart contract protocol can be considered completely risk free. The risks related to the Liqwid protocol are the smart contract risk (risk of a bug within the codebase) and liquidation risk (risk of collateral liquidation event). Security of the protocol is the Core Team's primary focus.
Tangible steps to minimize the risk have been completed; the smart contract code has undergone an external security audit and the Core Team has completed exhaustive internal testing of on-chain contract functions, off-chain components and infrastructure.
What is the Liqwid DAO Token (LQ)?
LQ represents the coordinating mechanism for on-chain community governance of the Liqwid protocol. LQ is used to propose upgrades, vote and implement changes based on the outcome of Liqwid Improvement Proposals (LIPs). In addition to community governance, LQ can be staked within the protocol Safety Pool (SP) to provide security & insurance to the protocol and suppliers. LQ stakers earn staking rewards and (subject to a community vote) may earn a portion of protocol revenue from the protocol.
Documentation on LQ tokenomics and governance is available in the Whitepaper and with further detail in the Agora GitHub repo. Please join in on the discussion in the Liqwid governance forum.
Additional Information and resources about Liqwid
Check out the Whitepaper for a deeper dive into the Liqwid protocol mechanism designs.
If you still have any questions or issues, please join the Liqwid Community Discord server where Community Managers and Core Team members are available to answer all of your inquiries.
*Please note there is NO Liqwid telegram and there is NO LQ airdrop. Please immediately report any Liqwid telegram channel you come across as a scam and be sure to stay safe by always verifying everything in our Liqwid Community Discord server.