4 Reasons Why Liquity V2 Will Mark The Future For DeFi Borrowing

This is a guest post written by Sam from Liquity

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We are thrilled to announce that Liquity V2 is now live on Ethereum Mainnet! Crypto has always been about free markets, and we’re excited to give power back to users with the first true market-driven borrowing rate for ETH. 

Here’s 4 reasons why we believe the launch of Liquity V2 will usher in a new era for DeFi!

1. Set Your Own Interest Rates - Borrow on Your Own Terms

Liquity V2 redefines DeFi borrowing with user-set interest rates. Unlike existing money markets and CDPs, where rates are dictated by governance or utilization, borrowers on Liquity V2 can set their own rates, empowering them to control borrowing costs and strategies. 

This market-driven approach is a first in DeFi, introducing a new primitive for capital-efficient borrowing. Borrowers can mint BOLD to access instant liquidity or multiply their exposure to ETH while borrowing on their own terms.

2. BOLD: The Ethereum-Native Stablecoin

Did you know that 99.96% of stablecoins aren’t DeFi-native because they rely on off-chain or centralized collateral? Only ~$70m (LUSD & RAI) of the $200 billion stablecoin market is based on trustless collateral. BOLD aims to create a paradigm shift.

BOLD is only backed by ETH and LSTs and always redeemable for the underlying assets, making it as liquid as ETH itself. Free from real-world asset (RWA) and off-chain risks, BOLD ensures decentralized stability with no counterparty reliance. Built on immutable contracts, it’s unstoppable—rules are set in stone and cannot be altered or frozen. On top of all that, there’s also a real yield component.

3. 100% Enshrined Revenue to Grow BOLD

Liquity V2 directs 100% of its revenue towards growing the stablecoin, BOLD. This is novel compared to its peers where there’s usually a middleman taking a cut (eg. governance, treasury, etc receiving a portion) resulting in a large spread between market participants.

75% of it goes to the Stability Pools, while 25% is funneled into Protocol Incentivized Liquidity (PIL). Apart from receiving an ongoing yield in BOLD, SP depositors also get (staked) ETH-denominated proceeds after liquidations events.

This creates a self-sustaining yield environment, where borrowers pay market-driven rates, and depositors receive sustainable, stable yields. The narrow spread ensures that depositors get a higher yield compared to traditional lending markets, which are often burdened by large gaps between rates.

4. Bootstrapping Through Forkonomics

Quick note from Nomatic:

I think paying close attention to this section could be crucial. It seems as though a lot of the forks will be distributing points (airdrops) to BOLD stability pool stakers + LPs (curve). To keep up to date on this, you can check out this section of the Liquity Docs.

Liquity V2 pioneers a unique bootstrapping mechanism: forkonomics. Launching with 15+ forks on chains like Hyperliquid, Arbitrum, and Berachain, Liquity V2 fosters shared liquidity and yield opportunities for users while scaling its ecosystem.

Each fork tailors its stablecoin to unique ecosystems and incentivizes BOLD adoption. Users can earn fees and incentives as early liquidity providers, supporting the success of these forks.

This creates a growth flywheel: forks expand BOLD’s reach, driving demand and yields for native Liquity V2 users, while forks can leverage Liquity’s secure infrastructure for the needs of their respective chains.

Every fork will detail its rewards program on their official channels, and these commitments will be tracked in Liquity V2’s Gitbook.

With market-driven rates, $BOLD as a truly user-controlled stablecoin, and a system that directs 100% of protocol revenues back to its users, Liquity V2 will redefine borrowing in DeFi.

Additionally, with 15+ friendly forks bringing the power of Liquity V2 to their respective chains, BOLD will unlock credit and liquidity across multiple networks—setting the stage for a ‘truly’ decentralized borrowing renaissance.

Try It Out And DYOR!

To understand the risks of Liquity V2, be sure to review the following:
- FAQ
- Risk Disclosure
- Technical Resources & Audits
- Protocol Disclaimer

We invite you to explore Liquity V2 on Ethereum Mainnet and join us in championing the free-market, immutable ethos of DeFi we wish to uphold.

Choose a community frontend to borrow on your own terms today.

If you’re interested in a deeper dive after reading this guest post from the liquidty team, check out our podcast we did with Michael Svoboda and Max Fiege on V2:

• Follow Liquity on X (Twitter) here