{ "claims": [ { "id": "c1", "text": "Liquity v1 (LUSD) has one collateral type (ETH), a protocol-set borrowing fee that rises algorithmically with redemption volume (no borrower-chosen rate), and redemptions ordered by lowest collateral ratio.", "label": "fact", "sources": ["https://docs.liquity.org", "https://k3capital.substack.com/p/liquity-v2-a-comprehensive-guide"], "date": "2021-04-01" }, { "id": "c2", "text": "Liquity v2 (BOLD) introduces borrower-set interest rates per trove, multiple collateral branches (WETH, wstETH, rETH at launch), and redemptions ordered by lowest interest rate first rather than lowest collateral ratio, plus a ~7-day-interest upfront fee on trove open/adjust.", "label": "fact", "sources": ["https://liquity.org/blog/interest-rate-management-in-liquity-v2", "https://docs.liquity.org/v2-faq/redemptions-and-delegation", "https://docs.liquity.org/v2-faq/borrowing-and-liquidations"], "date": "2024-02-01" }, { "id": "c3", "text": "Liquity describes the intended rate-market dynamic: below $1, redemptions become profitable so low-rate troves are hit, pushing borrowers to raise rates above the redemption frontier; above $1, redemptions are unprofitable and borrowers can lower rates to attract new borrowing.", "label": "fact", "sources": ["https://liquity.org/blog/liquity-v2-why-user-set-interest-rates"], "date": "2024-02-01" }, { "id": "c4", "text": "Borrowers can delegate rate-setting to an automated 'delegate'/rate manager instead of manually adjusting their trove's rate.", "label": "fact", "sources": ["https://docs.liquity.org/v2-faq/redemptions-and-delegation"], "date": "2024-01-01" }, { "id": "c5", "text": "No dataset was found in this research giving the actual cross-sectional distribution of BOLD borrower rates, clustering above the redemption frontier, or how fast average rates moved after specific peg-stress events.", "label": "uncertain", "sources": [], "date": "2026-10-29" }, { "id": "c6", "text": "Whether delegated rate managers changed rate-setting behavior (speed or tightness of clustering near the frontier) versus manual rate-setting was not evidenced in sources found.", "label": "uncertain", "sources": [], "date": "2026-10-29" }, { "id": "c7", "text": "LUSD traded near $1.00 through July-August 2023 (avg deviation ~0.0108 in July, ~0.0084 in August per Liquity's own report), then drifted toward $0.995, occasionally touching $0.99, in September 2023, coinciding with a series of redemptions.", "label": "fact", "sources": ["https://liquity.org/blog/liquity-q3-2023-report"], "date": "2023-10-01" }, { "id": "c8", "text": "Liquity's head of operations attributed LUSD's 2023 underpeg to MakerDAO's August 2023 8% DAI Savings Rate pulling demand away, enabling a carry trade (mint LUSD cheaply, hold higher-yield DAI), with arbitrage bots and softer stablecoin demand also cited.", "label": "fact", "sources": ["https://thedefiant.io/news/defi/lusd-briefly-spikes-to-usd1-03-after-trading-below-peg-since-july"], "date": "2023-10-01" }, { "id": "c9", "text": "As LUSD traded persistently below peg in H2 2023, redemption volume rose and the average collateral ratio of redeemed troves increased, i.e. redemptions began reaching better-collateralized (not only marginal) positions.", "label": "fact", "sources": ["https://parsec.substack.com/p/parsec-weekly-43"], "date": "2023-11-01" }, { "id": "c10", "text": "Liquity announced in February 2024 that the v2 redesign with user-set interest rates was aimed at letting borrowers reduce redemption-risk exposure by choosing higher rates, aligning individual incentives with peg stability, framed as a response to the v1 underpeg experience.", "label": "fact", "sources": ["https://thedefiant.io/news/defi/liquity-to-launch-new-cdp-stablecoin-protocol-in-late-2024"], "date": "2024-02-01" }, { "id": "c11", "text": "No precise count or dollar volume of individual LUSD redemption events in 2023-2024, nor exact redemption fee rate at each date, was found in this research; only qualitative descriptions were available.", "label": "uncertain", "sources": [], "date": "2026-10-29" }, { "id": "c12", "text": "No confirmed, dated account of a specific BOLD v2 redemption wave (size, trove count, branch affected) or a day-by-day BOLD price series showing peg deviation before/during/after such a wave in 2025-2026 was found in this research.", "label": "uncertain", "sources": [], "date": "2026-10-29" }, { "id": "c13", "text": "Liquity's risk disclosure states redemptions target lowest-interest-rate troves first and that BOLD 'may depeg' if confidence erodes, i.e. Liquity does not claim the mechanism guarantees the peg.", "label": "fact", "sources": ["https://docs.liquity.org/v2-documentation/risk-disclosure"], "date": "2024-01-01" }, { "id": "c14", "text": "No numeric current BOLD v2 redemption fee (base rate and decay function/half-life) was confirmed from a primary source in this research.", "label": "uncertain", "sources": [], "date": "2026-10-29" }, { "id": "c15", "text": "Because v2 redemptions rank troves by rate system-wide across collateral branches, the branch whose borrowers sustain the lowest average rate (e.g. yield-bearing collateral subsidizing borrower carry) should be expected to absorb a disproportionate share of redemptions; no branch-level redemption data was found to confirm this.", "label": "inference", "sources": ["https://docs.liquity.org/v2-faq/redemptions-and-delegation"], "date": "2026-10-29" }, { "id": "c16", "text": "On Feb 12, 2025, Liquity disclosed a potential issue affecting V2 Stability Pools ('Earn') and advised depositors to close positions; it said no users were known to be affected and Borrow/Multiply/Stake were unaffected.", "label": "fact", "sources": ["https://www.theblock.co/news/ecosystems/2025-02-12-liquity-stability-pool-urges-close-positions-after-team-reveals-potential-issue-340467", "https://www.liquity.org/blog/stability-pool-issue"], "date": "2025-02-12" }, { "id": "c17", "text": "DeFiLlama-sourced figures showed roughly $30 million in Stability Pool outflows over two days following the Feb 12, 2025 disclosure; Cointelegraph separately reported more than $17 million in the first 24 hours.", "label": "fact", "sources": ["https://thedefiant.io/news/defi/liquity-protocol-suffers-usd30-million-of-outflows-after-disclosing-v2-bug", "https://cointelegraph.com/news/liquity-v2-outflows-17m-investigation-earn-pools"], "date": "2025-02-14" }, { "id": "c18", "text": "On Feb 18, 2025 Liquity stated the Stability Pool issue could result in loss of funds held in those contracts and urged immediate withdrawal; a fix was in development pending audit.", "label": "fact", "sources": ["https://www.liquity.org/blog/stability-pool-issue"], "date": "2025-02-18" }, { "id": "c19", "text": "Liquity V2 was redeployed and went live on Ethereum mainnet on May 19, 2025, after a five-week public audit contest with 800+ researchers and re-audits by Dedaub, Recon, ChainSecurity, Coinspect, and Certora; the pre-incident deployment became 'legacy' and users were encouraged to migrate positions; fork-reward eligibility excluded activity after Feb 12, 2025.", "label": "fact", "sources": ["https://www.liquity.org/blog/liquity-v2-redeployment", "https://www.liquity.org/blog/liquity-v2-is-live"], "date": "2025-05-19" }, { "id": "c20", "text": "The exact technical root cause of the Feb 2025 Stability Pool issue was not stated in any source found in this research; no code-level public post-mortem was located.", "label": "uncertain", "sources": [], "date": "2026-10-29" }, { "id": "c21", "text": "The Feb 2025 incident was a fund-safety bug isolated to the Stability Pool/Earn subsystem; Liquity stated BOLD remained fully backed and redeemable throughout and that trove-opening, rate-setting, and redemption machinery were unaffected, distinguishing it from a redemption-mechanism or peg failure.", "label": "fact", "sources": ["https://www.liquity.org/blog/stability-pool-issue"], "date": "2025-02-18" }, { "id": "c22", "text": "No confirmed report of an exploit or sustained depeg at a named Liquity v2 fork (searched: Quill, Felix, Ebisu; Liquity's own forks page lists Aesyx, Soneta, Beraborrow, Alpen among others) was found in this research.", "label": "uncertain", "sources": ["https://www.liquity.org/forks"], "date": "2026-10-29" }, { "id": "c23", "text": "Liquity V2's codebase is published under a Business Source License requiring commercial deployments (forks) to obtain a licensing agreement with Liquity AG; a 'friendly fork' program exists for this purpose.", "label": "fact", "sources": ["https://www.theblock.co/news/defi/2025-01-23-ethereum-lending-protocol-litquitys-newest-version-wants-you-to-fork-it-336758", "https://docs.liquity.org/kr/documentation/friendly-fork-program"], "date": "2025-01-23" }, { "id": "c24", "text": "No borrower-reported cost figures quantifying a premium paid to avoid redemption (forum posts, governance threads) were found in this research.", "label": "uncertain", "sources": [], "date": "2026-10-29" }, { "id": "c25", "text": "No evidence of protocol or fork design changes made specifically in response to rate-gaming behavior (as distinct from the unrelated Stability Pool fund-safety fix) was found in this research.", "label": "uncertain", "sources": [], "date": "2026-10-29" }, { "id": "c26", "text": "Redemption-based peg mechanisms (both v1 and v2) are inherently one-sided: profitable arbitrage via redemption only exists when the stablecoin trades below $1; there is no equivalent hard on-chain arbitrage forced by the core protocol when it trades above $1, only discretionary borrower rate-lowering to attract new issuance.", "label": "inference", "sources": ["https://docs.liquity.org/v2-documentation/risk-disclosure", "https://liquity.org/blog/liquity-v2-why-user-set-interest-rates"], "date": "2026-10-29" }, { "id": "c27", "text": "A thin-market launch is more exposed than Liquity's historical experience to a sustained underpeg driven by an external competing yield (as happened to LUSD in H2 2023 vs DAI's 8% DSR), because thinner markets have less arbitrage/redemption liquidity to correct deviations quickly.", "label": "inference", "sources": ["https://liquity.org/blog/liquity-q3-2023-report", "https://thedefiant.io/news/defi/lusd-briefly-spikes-to-usd1-03-after-trading-below-peg-since-july"], "date": "2026-10-29" } ], "gaps": [ "Distribution and time-series of BOLD borrower-set interest rates, including clustering near the redemption frontier and speed of adjustment after peg stress.", "Whether and how much delegated rate managers changed rate-setting behavior versus manual borrowers.", "Specific dated BOLD v2 redemption wave(s): count, $ size, affected branch(es), and day-by-day peg deviation before/during/after.", "Current numeric BOLD v2 redemption fee (base rate and decay function).", "Branch-by-branch (WETH/wstETH/rETH/etc.) redemption volume breakdown for BOLD v2.", "Technical root cause of the February 2025 Stability Pool bug; no code-level post-mortem or audit report was fetched.", "Confirmed exploit or sustained depeg event at any named Liquity v2 fork (Quill, Felix, Ebisu, or forks listed on liquity.org/forks).", "Borrower-reported cost figures (forum/governance posts) quantifying the premium paid to avoid redemption.", "Protocol or fork design changes made specifically in response to observed rate-gaming behavior.", "Precise monthly LUSD v1 redemption counts and dollar volumes for 2023-2024." ] }