Dashboard & Use-case

Users that are looking for a fully decentralized lending option will already find their use-case with Liquity. As we mentioned in the intro article, the native LUSD stablecoin is pegged to USD based on the mathematical formulas governing Liquity's fees, and therefor, the volume of LUSD being borrowed/burned.

Considering its underlying mechanisms, Liquity v1 offers a high LTV of over 90% - which means that users holding ETH can get quite a bit of value from it.

However, the high LTV is not the only thing users have availability from Liquity on DeFi Saver. Through our interface, it's also possible to use the borrowed LUSD stablecoin and stake it within Liquity's stability pool. In turn, users get LQTY tokens and the rights to liquidation rewards from the stability pool.

This isn't the finish line though, as users can then stake the LQTY tokens to earn redemption and borrow fees from the protocol.

Outside of this capital efficiency, Liquity's LUSD stablecoin can be redeemed at any point for an exact 1:1 value ratio with USD, and users only pay a one-time borrowing fee when opening their Trove (Liquity's CDP).

In this article, we'll outline how you can open a position, and also stake your LUSD/LQTY. To start, let's look at how users can create a position:

Show me how:

The first step would be navigating to the Liquity dashboard by clicking its icon in the sidebar:

You'll land on the "Manage" tab by default, but you'll also have the:

  • Automate tab, which gives you access to automation options.

  • Notify tab, which lets you set custom-tailored notifications for your position.

  • Bond tab, which lets you interact with the Chicken Bonds protocol

The Chicken Bonds protocol is not in active development and we are sunsetting the integration. Therefor, we won't be covering it within this article, but users can still read about them in our retired Chicken Bonds article(s).

  • History tab, which gives you a history of actions that you took within your Liquity Trove.

Before creating a position, you'll see a metric called "TCR" - Which represents the Total Collateralization Ratio of all Liquity Troves:

In simple terms - it's the collateralization ratio of all the collateral ETH on Liquity compared to the LUSD debt.

This metric plays an important role in being the reference point of Liquity's "Recovery Mode" - which is Liquity's fallback safety mechanism. When activated, the liquidation threshold for Troves is raised to 150% - so even users who were previously safe and above the 110% threshold will get liquidated.

We've now covered the basics of Liquity's dashboard, so you're now ready to open a position. Let's dive right into how you can do that.

Clicking the "Create Trove" button will take you to a new tab:

The interface is pretty straightforward - You'll be able to:

  • Input the amount of ETH to place as collateral

  • Input the amount of LUSD you'd like to borrow

  • View your position's metrics before opening it

If you'd rather opt to open a Leverage position, simply click on the "Leverage" tab:

The interface is a bit more complex than the first due to the nature of leveraging. Here, you can:

  • Input the amount of ETH to place as collateral

  • Input the amount of LUSD you'd like to borrow

  • The leverage amount

  • The slippage limit

  • View your position's metrics before opening it

Whether you're ready to open a Borrow or Leverage position - the finishing touch will be clicking "Create":

If the transaction succeeds, you'll see the pop-up from above. You can feel free to press "Done" if you're not yet interested in turning on Automations.

If you're interested in Automations, please refer to our Knowledge Base articles that cover everything automation-related.

Now that the position is opened, the "Manage" tab will look like this:

The final part of the dashboard we'll cover are the manual management tools:

  • Boost - This tool is used to increase your exposure to the collateral asset when the safety ratio of your position increases. It does this by borrowing more LUSD, swapping it to ETH, and supplying it to your current position.

  • Repay - This tool is used to increase the safety ratio of your position by swapping part of your collateral asset in order to repay part of the debt.

  • Supply ETH - This tool is used to add more collateral to your position in order to increase the safety ratio.

  • Withdraw ETH - This tool is used to withdraw collateral from your position, in turn decreasing your safety ratio

  • Borrow LUSD - This tools is used to borrow more of the debt asset from your current position, in turn decreasing your safety ratio.

  • Pay back LUSD - This tool is used to pay back part of (or the entirety) of your debt, in turn increasing your safety ratio.

By clicking the "+" "Add second action" button next to the tab for your current tool, you'll be able to combine actions into a single transaction:

Before executing any of these actions, the dashboard will provide you with updated metrics for your position based on the values you've input:

You're now well equipped to efficiently manage your Compound position on DeFi Saver!

An open position on Liquity means you're now holding LUSD - so let's see how you can put it to use on DeFi Saver:

Staking LUSD/LQTY on DeFi Saver:

Staking on Liquity is very straightforward:

  1. Simply visit the main Liquity dashboard and click the "Staking" button:

  1. From there, you'll be able to choose whether you want to Stake LUSD or LQTY:

  1. In this example, we stake $5,000 LUSD by inputting the amount and clicking "Stake":

  1. The process is the exact same with staking LQTY. Additionally, once we've staked, we'll be able to see the staked amount on the "Portfolio" page:

Hovering over the "Staked" amount will give you a breakdown of your staked LUSD and LQTY, in case you have both staked.

One of the main benefits of utilizing DeFi Saver's service is access to our automation options that maintain your position based on your personal inputs. Liquity currently supports all of DeFi Saver's automations, meaning that opening a position with it gives you access to a plethora of automations. On top of this, we offer Liquity-exclusive automations such as Bonds Liquidation Protection and Redemption Protection.

Automations have minimal debt requirements and their availability depends on the chain you're currently on.

Closing your Trove:

If you decide to close down your current position, the steps are extremely straightforward:

  1. Navigate to the main dashboard:

  1. Select the "Close" button:

  1. Choose how you'd like to close your position.

  1. Since closing from your position involves swaps, you can also (optionally) set the slippage limit.

  1. Press "Close Trove"

The "Close (to X)" represents which asset will be withdrawn to your EOA wallet once the position is fully closed. To understand this in more detail, let's look at how the "Close" tool works in the background:

  • First, it flash loans the debt asset

  • It uses the flash loaned funds to pay back all of the debt

  • Now that your collateral is freed up, it's withdrawn

  • The collateral is then swapped to the debt asset

  • This is used to pay back the flash loan

  • The remaining funds are withdrawn to your EOA

Now, if you choose "Close to (collateral asset)", this means that it will only swap enough of your collateral to cover the flash loan, but it will withdraw the rest in the collateral token. If you choose "Close to (debt asset)", it's going to swap all of your collateral to the debt asset, pay back the flash loan, and the rest will be withdrawn in the debt token.

Related Articles:

  • Liquity

  • Available assets & comaptibility

  • What is a Trove?

  • Liquitiy Redemptions

Last updated