Liqwid Frequently Asked Questions

The Liqwid protocol is built on Cardanoโ€™s Plutus smart contract platform with strong transaction determinism and security guarantees.
The codebase is set to undergo multiple security audits before v1 launch on mainnet. The protocol will be completely open source, to enable anyone to interact with a user interface client, a contract endpoint API or directly with the smart contracts on the Cardano blockchain.

To utilize the Liqwid protocol, you first supply your preferred Cardano native asset and amount. After providing liquidity, you will earn interest calculated from the Market borrowing demand. Supplying assets allows you to borrow by using your supplied assets as a collateral. Any interest you earn by supplying assets helps offset the interest you accrue by borrowing.

Using the protocol requires transactions on the Cardano blockchain so transaction fees for use, which vary based on transaction complexity.

Your assets are stored in a Plutus smart contract. You can withdraw your assets from a Market at any time or transfer a tokenized (qTokens) version of your supplier position. qTokens can be transferred and traded on AMM DEXโ€™s as any other fungible cryptographic asset on Cardano.

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 development teamโ€™s primary concern and tangible steps to minimize the risk as much as possible are currently in action; internal audits, exhaustive testing of on-chain contract functions, off-chain components and infrastructure. The final step of multiple external security audits will commence during the public testnet launch. A bug bounty campaign will also go live during testnet launch.

LQ represents the coordinating mechanism for 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 a portion of protocol revenue and staking rewards from the protocol.
Documentation on tokenomics and governance is available in the Whitepaper and with further detail in the Agora GitHub repo. Feel free to join the discussion in the governance channels on Discord.

Check out the Whitepaper for a deeper dive into the Liqwid protocol mechanism designs.
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Why Liqwid?
How do I use the Liqwid protocol?
What is the cost of using the Liqwid protocol?
Where are my supplied assets located?
Is there any risk?
What is the Liqwid DAO Token (LQ)?
Additional Information and resources about Liqwid