> For the complete documentation index, see [llms.txt](https://docs.quill.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.quill.finance/faq/quill-and-liquity-v2.md).

# 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.

1. **Core Mechanics**: Like **Liquity v2**, **Quill** utilizes a collateralized debt position model where users can deposit assets as collateral to mint the stablecoin **$USDQ**. The underlying principles governing Troves and liquidation processes are inherited from **Liquity v2**, ensuring that **Quill** maintains a strong foundation in proven DeFi mechanics.
2. **zk-Rollup Integration**: **Liquity** operates on Ethereum, while **Quill** is built on **Scroll**, a zk-Rollup Layer 2 solution. This enables **Quill** to rely on **Scroll’s** zero-knowledge technology to achieve faster transaction speeds and lower costs while maintaining the core design principles of **Liquity v2**.
3. **Collateral Types**: **Quill** extends the range of collateral options compared to **Liquity v2**, specifically incorporating **staked Ethereum derivatives** like **wstETH, weETH, wETH, and Scroll's** native token, **SCR**. This diversification aims to provide users with additional liquidity options and improved capital efficiency.
4. **Governance**: **Quill** will introduce its governance token, **$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.
5. **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.

[*Read more about the Friendly Fork Program*](https://docs.liquity.org/v2-documentation/friendly-fork-program)