When you hear LQTY, the native token of the Liquity protocol, a decentralized system for borrowing stablecoins without interest. Also known as Liquity Token, it’s not just another crypto—it’s the engine that keeps one of DeFi’s most efficient lending systems running. Unlike most stablecoin platforms that charge interest, Liquity lets you borrow 100% collateralized USD (called LUSD) for zero fees. In return, users who borrow get rewarded in LQTY, and those who hold it earn a share of the system’s fees. It’s a simple idea, but it changed how people think about borrowing crypto.
LQTY isn’t traded just for speculation—it’s built into the core mechanics of Liquity. Every time someone opens a new loan, a small fee is paid in LQTY. That fee gets distributed to LQTY holders who stake their tokens in the Stability Pool, which acts like a safety net to absorb losses if a borrower gets liquidated. Think of it like a community fund that protects the system, and you get paid for helping out. This design makes LQTY more than a token—it’s a stake in the protocol’s survival. Related entities like LUSD, the interest-free stablecoin issued by Liquity, pegged 1:1 to the US dollar and Ethereum, the blockchain where Liquity runs, used as collateral for all loans are directly tied to LQTY’s value. Without ETH backing the loans, LUSD wouldn’t exist. Without LQTY, there’s no incentive for users to keep the system stable.
What makes LQTY stand out isn’t flashy marketing or celebrity endorsements—it’s math. Liquity’s liquidation mechanism is designed to be gentle, avoiding the violent cascades you see in other DeFi platforms. That’s why it survived the 2022 market crash better than most. And while many DeFi tokens lost 90% of their value, LQTY held its ground because people still needed to use the protocol. If you’re into DeFi, you’ve probably seen posts about LQTY in discussions about low-risk borrowing, passive income from staking, or how to avoid high fees. The posts below dig into real cases: how people used LQTY to earn rewards during volatile markets, what happens when ETH prices drop fast, and why some traders treat LQTY like a dividend stock instead of a gamble. You’ll also find comparisons with other stablecoin protocols, breakdowns of how fees flow through the system, and warnings about common mistakes new users make. This isn’t theory—it’s what’s actually happening on the blockchain right now.
Liquity (LQTY) is a DeFi protocol offering interest-free loans backed by ETH. Borrow stablecoins with just 110% collateral, redeem anytime, and earn rewards by staking LQTY. No interest. No middlemen. Just code.
