Freeliquid Protocol - a platform to support liquidity pools as collaterals
Protocol - a
platform to support liquidity pools as collaterals
The largest event
in the crypto space of 2020 has been the emergence of
DeFi, providing solutions and
access to financial services for everyone. Among many services
that DeFi offers, lending crypto assets
has become one of the major sectors of the industry. A new player
on the market,
offers loans in USD stablecoins for providing
liquidity pools as
collateral. This set up to be a major breakthrough, since
supporting stablecoins as security for the loan
guarantees safety both for the lending service and the
Protocol was launched on 21 December
2020. Being an open-source platform built on the Ethereum
blockchain, it is a fork of MakerDAO, another well-trusted lending
service. Similar to Maker, Freeliquid has two native tokens: the
USD stablecoin USDFL and the governance token
FL. There are three main components of Freeliquid: Borrow, Reward, and Save,
which are all accessible through their web app at
(USDFL) is an
ERC-20 stablecoin that is soft pegged to one US
dollar and backed by user-provided collaterals. It is the main
currency of the protocol and serves as a medium of exchange and an
efficient store of value with a stable market price. It is easy to
hold as well as transfer using cryptocurrency wallets. Like many
other ERC-20 tokens, it is tradeable on decentralized exchanges as
Borrow allows users
to lock their crypto assets in the form of liquidity pools as
collateral to borrow USDFL stablecoins. It is done by setting
up Freeliquid Vaults, which are
that generate USDFL after users lock their collaterals in
Borrow and issue a
loan. At the moment, Freeliquid Borrow supports
pools consisting of
the following stablecoins: USDT, USDC, DAI, and USDN.
More collateral types and platforms can be added later if the
community approves them through the voting.
Users have the
ability to borrow USDFL up to 90% of the collateralized asset
value. The loans do not require a third-party approval and users
are not bound by any date until which the repayment has to be made.
Loans can be issued and covered instantly and at any
The received funds
in USDFL are in full control of users and can be traded freely. For
example, this might include creating another pool on
Uniswap, almost doubling the original
passive income from liquidity fees.
Save is a savings
program that earns interest for USDFL holders. Users can lock their
USDFL in Freeliquid Save and receive constant
payments, also in USDFL, accrued to their balance. The funding
for Freeliquid Save comes from the interest
charged for the loans in Freeliquid Borrow, so there is no
inflation of USDFL involved. The user balance is updated constantly
and can be claimed all at once for the whole past period. Similar
to Freeliquid Borrow, the USDFL tokens can be
locked and unlocked with no penalties .
FL is the
governance token of the platform and its holders can participate in
the governance of the project through voting. The token can be
easily stored and transferred to any ERC-20 wallet. During the
first three months of Freeliquid, users are rewarded for
providing liquidity pools for the USDFL-FL pair.
The FL distribution
is based on the Fair Launch model that ensures an even distribution
of tokens. There has been no ICO or private sale of FL, instead,
the governance tokens will be distributed to users that support
liquidity of the native Freeliquid tokens. The four reward
programs are as follows:
Day 1 to 10,
an allocation of 100,000 FL - In the first 10 days, 100,000
FL will be distributed to users who lock their liquidity pools with
any pair consisting of the following stablecoins: USDT, USDC, DAI, USDN. The
rewards will be based on the user's share in the total value of
assets locked on Freeliquid Borrow.
Day 11 to
100, an allocation of 400,000 FL- the second program rewards
users that support liquidity of the FL token. Rewards are
distributed to users who add to the USDFL-FL liquidity pair
on Uniswap and lock their LP tokens
in Freeliquid Reward.
Day 11 to
381, an allocation of 450,000 FL - the third program rewards
users that support liquidity of the USDFL token. Rewards are
distributed to users who add to the USDFL liquidity pairs
with stablecoins on Uniswap and lock their LP tokens
in Freeliquid Reward.
Day 1 to 712,
an allocation of 50,000 FL - the fourth program will run
for 712 days and incentivize the use of Oracles for price updates
(i.e., the Oracles transaction initiators).
protocol allows the users to get USD stablecoins by locking
liquidity pools as collaterals. This allows investors to get access
to additional funding and to increase the size of the existing
liquidity pools. The funds can also be used for several other
purposes including trading and yield farming. Effectively, users
can turn their liquidity pools into sources of extra funding,
increasing their profits with almost no risk.
Support of stablecoin pools (as opposed to volatile crypto assets)
has another two major advantages. First, it enables to issue a high
amount of funds (up to 90%) for the collateral provided. Second,
there is no risk of a liquidation of the user position - the value
of security always stays above the liquidation threshold. For this
reason, the liquidation module of the Freeliquid Protocol is
completely switched off for stablecoin pairs.
- The FL
governance token being issued through the Fair Launch model. This
prevents anyone from accumulating large positions FL tokens,
potentially outvoting the rest of the community or selling them at
once, resulting in a sudden price fall of FL.
project will grow together with the DeFi market as more liquidity
pairs and platforms are supported on Freeliquid.
use of Freeliquid is
completely anonymous. Everyone can fully access Freeliquid by
simply connecting a personal Ethereum wallet. There is no need to
register with an email or go through the KYC process.
smart contracts of the Freeliquid Protocol has been recently
audited by Beosin Blockchain Security, one of the leading auditing
companies on the crypto market. The audit has been successfully
passed on all items.
offer a great source of passive income with minimal risks to its
holders. They also represent a perfect security, since lenders can
be sure that the value of the collateral provided is not going to
drop down significantly. However, no lending platforms so far have
been supporting them as collateral -
Freeliquid. By using the
providers can now take advantage of their assets. They
simultaneously keep the passive income from liquidity fees and
receive funding for their free usage - a great deal that is rare to
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