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Liquity To Launch New CDP Stablecoin Protocol In Late 2024 – The Defiant

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Liquity to introduce LST support and dynamic user-set interest rates in bid to drive growth.

Liquity, the project behind the LUSD decentralized stablecoin, will launch a newly redesigned protocol this year.

On Feb. 15, Liquity announced plans to launch a revamped collateralized debt protocol (CDP) seeking to address the shortcomings encountered by its current offering in recent years.

Liquity’s new protocol will introduce several new features, including support for liquid staking tokens (LSTs) as collateral, and new mechanisms designed to maintain LUSD’s peg to the dollar. Liquity will also debut dynamic “user-set interest rates” alongside a new liquidation system that will prioritize forced redemptions for users paying lower fees.

“We are strongly convinced that the introduction of this new DeFi primitive, centered on user-driven interest rates, not only enhances its direct appeal to users but also opens doors for developers and protocols,” Liquity said. “By choosing higher interest rates, borrowers can reduce the likelihood of being affected by redemptions, thereby aligning their individual incentives with the stablecoin peg dynamics of the system.”