Liquity (LQTY)

LQTY is the protocol token connected to Liquity’s fee revenue. Holders can stake LQTY to receive a share of fees generated by the system, including fees associated with borrowing and redemptions. This distinguishes LQTY from LUSD: LUSD is the debt and stablecoin asset used within the borrowing mechanism, while LQTY is tied to participation in the protocol’s economics.

Liquity’s design is notable for being immutable and governance-free. Once deployed, the core protocol does not rely on token-holder votes to adjust parameters or manage borrower positions. This approach is intended to reduce governance risk and make the system more predictable, although it also means the protocol cannot be easily altered in response to changing market conditions.

Loans are secured not only by borrower collateral but also by the Stability Pool, where LUSD depositors help absorb liquidated debt in exchange for collateral rewards. The system also uses mechanisms that allow redemptions of LUSD for underlying collateral, supporting the stablecoin’s peg.

For users, Liquity offers a capital-efficient way to borrow against ETH. For LQTY holders, the asset provides exposure to protocol usage and fee activity within a decentralised lending system built around transparency, automation, and minimal administrative control.