Liqwid App User Guide
Learn how to navigate the mainnet beta app like a pro with this guide.
Intro to Liqwid
Liqwid is a non-custodial liquidity protocol for lending and borrowing Cardano native assets. The Liqwid protocol is composed of decentralized, audited smart contracts built on Cardano using Plutus, the smart contract programming language of the Cardano blockchain. The smart contracts enable users to deposit liquidity in a money market, earn interest and open overcollateralized loans directly with no intermediaries in a permissionless and secure approach. The ADA deposited in Liqwid’s Cardano money market is delegated to multiple Cardano stake pool operators and ADA suppliers (qADA holders) earn full staking rewards on the ADA deposited but not borrowed in the market. This user guide describes how to successfully complete market actions in the app and explains how to safely navigate the app as a borrower. For more information, questions or to request help navigating the app please join the Liqwid Community Discord server. Liqwid Community Managers and Liqwid Labs developers are here to help you and answer any questions related to the app.
How to supply assets (mint qTokens) and earn interest
Once you have your wallet connected to the Liqwid app interface with wallet collateral set, you’re ready to lend ADA, DJED and other Cardano native assets (soon!)! Earning interest using Liqwid as a lender is as simple as supplying assets to a Liqwid Market and minting qTokens, an interest bearing token that represents your deposit amount and accrued interest. As borrowers repay accrued interest in that market the qToken to underlying asset exchange rate will increase, representing the repaid interest. This is the increased amount of underlying assets qToken holders (ADA and DJED suppliers) earn.
*Cardano transaction costs must be paid using ADA and your wallet’s collateral must be set to interact with the app interface. You will need to ensure enough ADA remains in your wallet after a market action to pay for the transaction fees set by the Cardano network.
To supply assets follow these steps!
- 1.Visit the app at app.liqwid.finance, connect your wallet, and navigate to the “Assets to supply” section.
- 2.Select an asset to supply and click the "Supply" button (the Liqwid mainnet beta app currently only supports ADA and DJED).
*Users can view the current supply APY representing the interest suppliers (qToken holders) are currently earning annualized.
- 3.Enter the amount you want to supply in the "Amount" input field at the top of the modal. You can either enter a specific amount or select the ‘MAX’ button to supply your entire wallet’s balance.
- 4.Once you have entered the supply amount and reviewed the “Transaction overview” section click the “Supply” button at the bottom of the modal and approve the transaction in your wallet.
*You can review the current qADA exchange rate and supply APY to confirm how much qADA will be minted in your wallet and the current APY you will begin earning.
Once you successfully complete the supply action a transaction overview will appear displaying your completed action. You can click the “Review transaction details” button to view the transaction hash and details on Cardano block explorer cexplorer.io and you can confirm your minted qADA by viewing the token list section in your wallet.
You can view your supplied assets, the current APY, and the amount of supplied assets locked as collateral in the “Your supplies” section.
How to borrow assets
The Liqwid protocol allows users to borrow assets once you have supplied one of the assets community governance has allowed to be used as collateral. The overcollateralized loans accrue a variable interest rate based on the market’s current borrow demand (that is the ratio of borrowed assets vs supplied, e.g. if 100 ADA is supplied to a market and 50 is borrowed the market has a 50% utilization ratio). Borrowers must keep their loan’s LTV beneath the maxLTV (maximum borrowing power) to avoid risking liquidations.
The mainnet Liqwid ADA and DJED market’s both have a maxLTV of 75% (133% minimum collateral ratio).
To borrow assets follow these steps!
- 1.Visit the app at app.liqwid.finance, connect your wallet, and navigate to the “Assets to borrow” section.
- 2.Click on the “Borrow” button for the asset you want to borrow.
- 3.Input the amount you want to borrow in the “Amount” input field at the top of the modal.
*Entering a borrow amount in the “Amount” input field will prompt you to enter a collateral amount in the “Collateral distribution” input field, this is the amount of qToken collateral you want to lock as collateral to open the loan. Your loan must have enough collateral to reach a health factor of 1.067.
*The total amount you can borrow depends on the collateral value for the assets you have supplied and the available liquidity in the market you are borrowing from.
- 4.Enter a specific collateral amount in the “Collateral distribution” input field or click the “MAX” button to deposit your entire qToken balance as collateral. The loan must be under the ADA and DJED Market’s maxLTV of 75% to succeed (133% minimum collateral ratio).
Review the loan details including the current interest rate to borrow the asset and your positions corresponding Health factor in the “Transaction overview” section.
- 5.After reviewing the borrow action details click the “Borrow” button at the bottom of the modal. Once the transaction completes you will receive the borrowed assets in your wallet. You can review the loan transaction hash and details on cexplorer.io by clicking the “Review transaction details” button.
*Borrowers must monitor their loan’s health and be prepared to repay the position or increase collateral during adverse market conditions.
Once you successfully complete a borrow action you will see your supplied balance reduced by the amount of collateral you entered in the “Collateral distribution” section and locked to open the loan. You can view this amount in the “Total locked collateral” column of the “Your supplies” section. You are earning interest on your entire supplied assets, including the qTokens you lock as collateral.
*You can unlock this collateral at anytime by completing a repay (or borrow) action and reducing the amount in the "Collateral distribution" input field. Detailed instructions for unlocking collateral are explained in the next section.
Reduce your collateral in the "Collateral distribution" input field of the repay modal
You can unlock your collateral by opening the repay (or borrow) modal, reducing the amount in the “Collateral distribution” section’s input field and completing an action. Please note you must complete a repay (or borrow) action on the loan to reduce and unlock your collateral.
To unlock or modify collateral follow these steps!
- 1.Enter an amount to repay (or borrow) in the “Amount” input field at the top of the modal and enter the reduced qToken collateral amount in the “Collateral distribution” section’s input field. For your transaction to succeed please ensure your corresponding position is above the required 1.067 Health factor by reviewing the resulting Health factor in the “Transaction overview” section.
How to repay a loan
The Liqwid protocol enables you to fully or partially repay your loans on demand. You can also modify your loan’s collateral distribution during repayment if you wish to add or reduce collateral (see section above).
To repay loans and modify collateral follow these steps!
- 1.Visit app.liqwid.finance, connect your wallet, and click on the "Repay" button via the “Your borrows” table on the right.
- 2.Enter the amount you wish to repay in the input field. You may also adjust your Collateral distribution input field to add or remove from your loan’s collateral as long as you maintain an LTV under the maxLTV for your collateral asset.
*To adjust your collateral amount enter an amount in the “Collateral distribution” section’s input field that corresponds to a valid LTV. When adjusting your collateral amount in the “Collateral distribution” input field the “Repay” button at the bottom of the modal will be grayed out until a valid amount is entered.
*When you click the “MAX” button to repay your entire loan amount the “Collateral distribution” section will blur out indicating that your entire qToken collateral will be unlocked and returned to your wallet upon successful repayment of the total loan balance.
- 3.Review the changes to your loan’s Health factor and remaining debt in the Transaction overview section. Be sure to maintain a strong Health factor above 1.067 to avoid collateral liquidation risk.
- 4.Once you have reviewed the borrow action details in the “Transaction overview” section, click “Repay” and approve the transaction in your wallet.
To view the transaction hash and details on cexplorer.io click the “Review transaction details” button.
Liqwid allows you to supply and withdraw your assets from the protocol at any time. When you supply ADA you mint qADA at the current exchange rate and when you redeem qADA you burn it and withdraw your supplied ADA back into your wallet.
To redeem qTokens and withdraw assets from the protocol follow these steps!
- 1.Visit app.liqwid.finance, connect your wallet, and click on the "Withdraw" button via the “Your supplies” table on the left.
- 2.Enter the amount of assets you want to withdraw from the market in the “Amount” input field. You can withdraw all assets supplied by pressing the “MAX” button next to the wallet balance in the Amount input field.
*The total amount of assets you may withdraw depends on the amount of your supplied assets you have locked as collateral and the market’s current liquidity.
- 3.Review the “Transaction overview” section to see the current qADA exchange rate you are redeeming at to calculate the total amount of ADA you are receiving as interest (the increase in the qADA exchange rate from when you initially supply to when you withdraw represents your accrued interest).
- 4.Once you have reviewed the withdrawal action transaction details click the “Withdraw” button at the bottom of the modal and approve the transaction in your wallet.
*To review the withdrawal action transaction hash and details click the “Review transaction details” button.