What can the lending platform Liqwid Finance do?

Something is slowly happening in Cardano’s DeFi sector, which has doubled since the beginning of the year in terms of Total Value Locked (TVL) after months of lull. When the first stablecoin DJED was launched at the end of last month, the blockchain also got its own potential lending bulwark Liqwid Finance. It is considered an upcoming flagship platform when it comes to DeFi on Cardano. The mainnet version, which is still quite sparsely equipped, is to be gradually supplemented with new tokens and features in the coming weeks.

What is Liqwid Finance?

At first glance, Liqwid resembles the Compound Finance platform. The protocol native to Ethereum allows users to lend cryptos and earn interest on them, or borrow cryptos against interest payments. So lending and borrowing – a cornerstone of every DeFi ecosystem. On Cardano, however, there has been a lack of such earning opportunities alongside traditional staking or liquidity mining.

However, Liqwid is not simply a copy of the Ethereum counterpart. The project wants to offer its users more thanks to Cardano’s liquid staking design. This expands the protocol’s potential revenue streams while allowing ADA users to deploy their cryptos far more effectively than on Compound or Aave.

What makes Liqwid special?

For example, if you lend ADA a certain amount, you get a kind of token called qADA. This is similar to the cTokens on Compound, which are increasing in value and thus simulating interest payments on deposited cryptos. Unlike Compound, however, lenders on Liqwid earn additional staking rewards for their deposited ADA. Together, that’s currently a four to six percent return on staking plus lending. Investors should be able to kill two birds with one stone here.

Also, both lenders and borrowers earn the native Liqwid token (LQ). On the one hand, this gives its holders voting rights in the Liqwid DAO, in which protocol changes are decided. On the other hand, it can be invested in turn, which means that more tokens can be earned and liquidity on the platform is secured.

Liqwid: Cardano’s liquid DeFi headquarters?

Money markets like Liqwid, Compound, and Aave are in demand on their native blockchains and are fast becoming focal points in the ecosystem. Because like the banking world, idle crypto capital can be redistributed here to better serve the needs of investors. For Cardano, the launch of Liqwids is an important step in closing the gap to other DeFi ecosystems.

In addition to ADA, other popular markets will also be opened on Liqwid over time, for example for the new stablecoin DJED. This would likely lead to another increase in TVL on Cardano as users would then have far more opportunities to monetize their dollar equivalents. Also, borrowed tokens can be staked elsewhere on Liqwid. For example in the liquidity pools of other Cardano-based DEXes like Minswap or SundaeSwap.

Last year, the team put behind Liqwid in a tweet shows how one can create up to nine different income streams as the linchpin of such a DeFi network. After more than a year of testing, this is more tangible than ever with the recent mainnet launch.