Liquity V2- Some of the Highest Organic Yields in DeFi

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Liquity is one of our favorite DeFi Protocols. Launched in 2021, it was the first truly Decentralized Stablecoin, with immutable contracts and ETH-only collateral. It did quite well and even today has $328M TVL.

But Liquity V1 had a major flaw - one of its key selling points - 0% interest rates, led to issues when the Fed started raising rates.

Since Liquity's LUSD often had cheaper borrowing rates, it was used a lot - to farm other stables. That meant LUSD minters often got redeemed - losing a bit of their collateral to redeemers.

Liquity v2 was born out of this and addresses all the issues V1 had:

Instead of no interest rates, v2 has user set interest rates. Those interest rates in turn feed the stability pool, which now has market-competitive organic yields.

All these factors mean Liquity v2 is a lot more robust, and also has higher, more attractive yields than V1.

We sat down with Michael Svoboda and Colin Platt from Liquity to find out more about Liquity v2 - theres some hidden alpha, so recommend watching to the end if you have time.

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