Liquity is a decentralized borrowing protocol that allows you 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%.

In addition to the collateral, the loans are secured by a Stability Pool containing LUSD and by fellow borrowers collectively acting as guarantors of last resort. Learn more about these mechanisms under Liquidation. Liquity as a protocol is non-custodial, immutable, and governance-free.

Stable-value assets are an essential building block for Ethereum applications and have grown to represent tens of billions of dollars in value. 

However, the vast majority of this value is in the form of fiat-collateralized stablecoins like Tether and USDC. Decentralized stablecoins like DAI and sUSD make up only a small portion of the total stablecoin supply, meaning the vast majority of stablecoins are centralized.

Liquity addresses this by creating a more capital efficient and user-friendly way to borrow stablecoins. Furthermore, Liquity is governance-free, ensuring that the protocol remains decentralized.

Liquity’s key benefits include:

0% interest rate — as a borrower, there’s no need to worry about constantly accruing debt

Minimum collateral ratio of 110% — more efficient usage of deposited ETH
Governance free — all operations are algorithmic and fully automated, and protocol parameters are set at time of contract deployment

Directly redeemable —  LUSD can be redeemed at face value for the underlying collateral at any time

Fully decentralized — Liquity contracts have no admin keys and will be accessible via multiple interfaces hosted by different Frontend Operators, making it censorship resistant