Quill & Liquity v2
What is Liquity v2?
Liquity v2 is a decentralized borrowing protocol that allows users to take out loans against their collateral (ETH) in the form of a stablecoin called BOLD. The protocol operates with set interest payments and relies on a minimum collateralization ratio (MCR) of 110%, ensuring that users maintain a healthy buffer between the value of their collateral and the amount they borrow. Liquity v2 aims to provide a censorship-resistant and user-friendly platform for borrowing while keeping the value of BOLD pegged to the US dollar through various mechanisms.
What is the relation between Quill and Liquity?
Quill is a fork of the Liquity v2 protocol, built to enhance the capabilities of decentralized finance (DeFi) while integrating specific features tailored for its ecosystem. This relationship allows Quill to leverage Liquity's robust mechanisms for minting stablecoins and managing collateralized debt positions while introducing unique improvements and innovations.
Core Mechanics: Like Liquity v2, Quill utilizes a collateralized debt position model where users can deposit assets as collateral to mint the stablecoin $USDQ. The underlying principles governing Troves and liquidation processes are inherited from Liquity v2, ensuring that Quill maintains a strong foundation in proven DeFi mechanics.
zk-Rollup Integration: Liquity operates on Ethereum, while Quill is built on Scroll, a zk-Rollup Layer 2 solution. This enables Quill to rely on Scroll’s zero-knowledge technology to achieve faster transaction speeds and lower costs while maintaining the core design principles of Liquity v2.
Collateral Types: Quill extends the range of collateral options compared to Liquity v2, specifically incorporating staked Ethereum derivatives like wstETH, weETH, wETH, and Scroll's native token, SCR. This diversification aims to provide users with additional liquidity options and improved capital efficiency.
Governance: Quill will introduce its governance token, $QUILL, which empowers its holders to participate in protocol decisions, including adjustments to parameters, fee structures, and future developments. This governance mechanism is crucial for fostering community engagement and ensuring that user interests are prioritized.
Security and Audits: Quill benefits from Liquity’s established security framework while undergoing independent audits to validate its smart contracts. By combining the security principles from Liquity with additional measures, Quill aims to provide a safe environment for its users.
Quill builds upon the successful model established by Liquity integrating its model on another network, expanding its reach to DeFi users. This relationship helps Quill maintain a solid foundation in decentralized stablecoin solutions while adapting to the changing landscape of blockchain technology and user expectations.
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