Liquity
Crypto Overview
Project Overview
Liquity is a decentralized borrowing protocol that allows users to draw interest-free loans against Ether used as collateral. Loans are paid out in LUSD (a USD pegged stablecoin) and need to maintain a minimum collateral ratio of 110%.
Intended Utility
LQTY is the protocol's governance and staking token. The primary utility of LQTY is to incentivize stability providers and allow holders to earn protocol fees. When staked, LQTY holders receive protocol revenue from issuance fees, redemption fees, and liquidation revenue.
Actual Utility Assessment
The protocol has demonstrated significant real-world adoption with over $200 million in Total Value Locked (TVL) as of 2024. The platform maintains active development and regular updates, with a strong focus on security and stability. The actual usage aligns well with its intended purpose, as evidenced by consistent protocol fee generation and active participation in the stability pool.
Token Distribution and Founder Analysis
The token distribution shows a relatively fair allocation, with no excessive concentration among founders or early investors. The team received 20% of the total supply with a 1-year linear vesting period. The majority of tokens (80%) were distributed to users through protocol usage and liquidity mining.
Technical Implementation
While the protocol involves lending and borrowing, it implements an interest-free model which aligns with Islamic finance principles. The revenue model is based on one-time fees rather than ongoing interest payments. The protocol's stability mechanism and liquidation process are transparent and based on clear mathematical formulas.
Crypto Impact
To assign a comfort level investing in Liquity from a halal perspective we need to determine whether it has a net positive or negative impact.
Towards this end, the table below is used to tally all the positive and negative considerations our members can think of related to Liquity.
If you don’t see something that should be listed, positive or negative, feel free to submit your own contribution using the button “Contribute”.
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