When you hear LQTY, the native token of the Liquity protocol, used to incentivize users and stabilize the system. Also known as Liquity token, it doesn’t trade like a typical cryptocurrency—it’s a utility and governance token built to keep a decentralized loan system running smoothly. Unlike most DeFi projects that rely on volatile collateral or complex interest rates, Liquity lets you borrow USD (called LUSD) against your ETH with zero interest. All you need to do is lock your ETH as collateral, and the system automatically adjusts to keep things stable—even when markets crash.
That’s where LUSD, a decentralized, interest-free stablecoin pegged to the US dollar, issued by the Liquity protocol comes in. It’s not backed by banks or reserves—it’s backed by your ETH, and the protocol uses smart contracts to ensure it stays worth $1. If the value of your collateral drops too low, the system automatically liquidates it. But here’s the twist: instead of auctions, Liquity uses a unique mechanism called stability pool, a reserve of LUSD deposited by users that absorbs losses from liquidated positions. People who put LUSD into this pool get rewarded with LQTY tokens. It’s not a yield farm—it’s a safety net you get paid to help build.
And then there’s ETH, the only collateral accepted by Liquity, making it one of the most focused DeFi protocols in existence. No altcoins. No complicated risk layers. Just ETH in, LUSD out. That simplicity is why traders and long-term holders use it. You’re not gambling on price swings—you’re using your ETH as a loan machine. And if you’re active, you earn LQTY just for participating. No staking required. No locking periods. Just open a position, and the rewards start flowing.
But LQTY isn’t just about rewards. It’s also the voting token. Holders decide on protocol upgrades, fee changes, and even how much collateral is needed to borrow. That’s rare in DeFi—most projects are run by a small team or DAO with little real participation. Liquity’s design pushes power to the users who actually use it. And because the system is built to survive crashes, it’s been tested in bear markets. When Ethereum dropped 70% in 2022, Liquity stayed live. No collapses. No hacks. Just clean, quiet operation.
What you’ll find in the posts below isn’t hype. It’s the real stuff: how to set up a Liquity position without over-collateralizing, why LQTY’s price moves independently of ETH, what happens when the stability pool runs low, and how to spot fake LQTY tokens on scam sites. No fluff. No promises of 1000x returns. Just the facts about how this quiet, powerful DeFi engine works—and why it’s still one of the most reliable ways to borrow in crypto.
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.
