1 Year Mainnet Launch Anniversary

One year ago, on February 2, 2023, Liqwid emerged as Cardano’s first non-custodial pooled liquidity protocol, revolutionizing the lending and borrowing landscape for ADA and Cardano native assets. Peer-to-pool lending and borrowing protocols allows suppliers to deposit assets in a money market and instantly access both interest on deposits and ability to borrow against deposits in a permissionless onchain environment.

In the span of twelve months, Liqwid has transformed from a fledgling DeFi protocol to the largest lending protocol on Cardano with a Total Value Locked (TVL) of $36.9m (Supplied assets: $49.3m | Borrowed assets: $12.4m) and $6.9. worth of LQ staked and participating in onchain DAO governance. Liqwid market data can be tracked directly in the app here.

Notably, Liqwid's increase in Total Value Locked is attributed to the introduction of new markets, now totaling 12 assets, including the recent addition of ERG just a few days ago. The app UI has also undergone a significant overhaul, incorporating Optim bond tokens as collateral and paving the way for the acceptance of various Cardano tokens (NFTs, utility tokens, RWAs etc.) as collateral on Liqwid in the future.

The top 5 largest lending protocols in DeFi are all peer-to-pool and account for $18b in TVL with Aave leading with $7b in TVL and $3.7b in borrows. Liqwid combines dual yields from ADA borrow interest and Cardano staking rewards into a single yield-bearing receipt token (qTokens) for ultimate composability. In this way Liqwid’s qADA combines Aave v2 liquidity pools and Lido liquid staking into a single LP token.

Liqwid qTokens such as qADA operate similarly to LP tokens on an AMM DEX, they are minted when users deposit liquidity in a market and can be locked as collateral to open loans. To our knowledge Liqwid is the only DeFi protocol on any chain that delivers dual yields from borrower interest and L1 staking rewards in a single yield-bearing LP token to lenders. This makes qADA a true DeFi innovation and is a prime example of composable and capital efficient DeFi products built on Cardano.

Liqwid has become a magnet for ADA lenders, thanks to its innovative qADA dual yield-bearing implementation. During high market utilization when the Borrow APY is high ADA lenders earn an increased Supply APY above the base Cardano staking yield (e.g. at 50% utilization ADA Supply APY is 8.75% not including LQ supply incentives) and when utilization is lower it ensures ADA lenders are earning slightly above the Cardano staking yield from Liqwid’s LQWD stake pool which auto-deposits 100% of ADA staking rewards into the ADA market following each epoch transition, charges zero fee and earns higher rewards on average from Cardano staking’s a0 parameter with a competitive pledge of 25m ADA.

A remarkable achievement is the creation of 39 governance proposals through Liqwid DAOs Agora instance in year 1. Agora was built and tested by Liqwid Labs engineers, audited by a third party (Vacuumlabs) and is fully open-source. Projects such as Clarity and SummonDAO have built DAO aggregator products that utilize Agora smart contracts and include extended functionality for fully onchain proposal effects.

Building on top of the protocol’s out of the box composability and capital efficiency, the Liqwid team has focused on enhancing the application's design and utility since initial mainnet launch.

In the summer of 2023, the team initiated a comprehensive optimization of the app UI and infrastructure, resulting in Liqwid v2. This includes a complete rewrite of the offchain and integration with Lucid in what’s become the focal point of v2 and has been named "Aqueduct." This version promises near instant transaction building-submission flow and comes with a new API for seamless Liqwid market integration with Cardano aggregators and wallets. Aqueduct and Liqwid v2 is about harnessing the full power of Cardano's eUTXO transaction model and onchain-offchain smart contract dynamic to deliver an ultra-fast app UI and an elevated user experienced for newcomers and DeFi veterans alike.

Ongoing development efforts on Aqueduct will launch on mainnet incrementally, with new modules replacing old ones until the complete v2 is fully live and have replaced all v1 components.

Simultaneously, Liqwid's infrastructure have been redesigned with a new version built entirely from the ground up utilizing Kubernetes and with a focus on resilience and speed. The Liqwid infrastructure improvements workstream has been bolstered by the recruitment of DevOps experts to migrate all existing infrastructure to the newly built Kubernetes infrastructure setup including a 360 view infra monitoring cockpit with robust deployment and control systems.

Screenshots of the new DevOps dashboards used to manage and monitor Liqwid infrastructure.

A bright future for Liqwid and Cardano DeFi

While these protocol and user facing improvements are evident, the core team's internal journey has been equally transformative. From navigating uncharted territory in Cardano's then new and unlaunched Plutus smart contract environment to deploying Liqwid v1 utilizing Plutus v2 advancements and now looking forward to upcoming Cardano smart contract and transaction level improvements that will enable an enhanced user experience, our dedication to Liqwid users and focus on building innovative Cardano DeFi solutions has always been the same.

This journey has provided our core team invaluable lessons and has helped make Liqwid engineers more adept at improving the protocol and user experience. The learning curve has been steep, but the Liqwid core team now boasts faster shipping, increased developer efficiency, and enhanced risk management activities as a result of the past 12 months on mainnet.

Looking ahead to 2024, the core team assures Liqwid protocol users and LQ holders that the solid foundation laid through Liqwid v2, Aqueduct, infrastructure improvements and internal operational improvements will accelerate Liqwid’s growth and propel adoption of the protocol by both developers and users to new heights.

So, remember to stay hydrated, as we conclude the stretching mode – the real game is about to begin! Cheers to Liqwid turning 1 and a massive thanks to all of the incredible community members, developers and protocol users who have played a role in its growth since inception during Catalyst Fund1.

-Liqwid Core Team