Cryptocurrency
Liquity, a new Ethereum-based lending protocol, promises a fully redeemable stablecoin
The Block reports, “There’s a new Ethereum-based stablecoin protocol in town, and its creator believes that the strategy it will employ to maintain parity with the U.S. dollar will make the system more capital-efficient and less risky than its predecessors. “Called Liquity, the system was designed by Robert Lauko, a former blockchain researcher at the decentralized […]
The Block reports, “There’s a new Ethereum-based stablecoin protocol in town, and its creator believes that the strategy it will employ to maintain parity with the U.S. dollar will make the system more capital-efficient and less risky than its predecessors.
“Called Liquity, the system was designed by Robert Lauko, a former blockchain researcher at the decentralized cloud startup Dfinity. Lauko is also the CEO of a new startup, also called Liquity, unveiled today.
“To mint the protocol’s stablecoin, called LQTY, borrowers will have to deposit much less collateral than is required by existing systems like MakerDAO, which Lauko attributes to the protocol’s ability to ‘instantly liquidate’ risky loans, and a novel redemption mechanism that minimizes the need for governance.
“Protocols like MakerDAO let users deposit cryptocurrency-denominated collateral to take out loans denominated in U.S. dollar-pegged stablecoins. To account for the volatility of the crypto-collateral, they typically require users to deposit significantly more value in crypto than they borrow in stablecoins, which in MakerDAO are called DAI…”