There are some known risks (mostly smart contract vulnerabilities and liquidation risks) to the DeFi system, and no platform should be considered 100% safe. However, both dForce and Liqee take extensive measures to ensure risk management is implemented on multiple levels:
- Smart contract review and formal verification by multiple world-class blockchain security companies: Trail of Bits, ConsenSys Diligence, Certik, Certora.
- Bug bounty program.
- Risk assessment for each asset supported.
- Third-party DeFi smart contract cover.
- When supplying assets: free
- Loan origination: free
However, a small fee will be charged from interest spread (borrowing interest minus saving interest) to fund the interest reserve, which can be utilized to buy back LQE from secondary market or redistribute as bonus to LQE holders (subject to governance decision).
Liqee is a decentralized money market protocol utilizing smart contracts to facilitate crypto lending. Only users have access to and full control over their funds and we do not hold your asset – this is how decentralized finance works. Please make sure to keep you private key safe as we are unable to retrieve your private keys, access your account, reset your password or reverse transactions. It would be extremely upsetting if you lost your private key as you will permanently lose access to your fund.
In most cases, instant withdrawal is supported. However, deposit must be of greater value than loan demand of the same asset so that investors can withdraw fund at any time (adequate liquidity), that is to say, total availabilities of funds for withdrawal is subject to the size of liquidity pool (total supply minus total borrow), which is decided by Utilization Ratio of the asset. The higher the Utilization Ratio, the higher the supply rate / borrowing rate.
In extreme events of liquidity drain, where the utilization ratio is close to 100% and interest rates are pushed to above market level, investors will be incentivized to supply assets into the protocol for attractive investment returns, and borrowers will have to repay some loans to avoid liquidation of collaterals, which will bring liquidity back to normal level.
Yes. Investors can refinance or pay off your loans (in portion or in full) at any time. Interest will be calculated through the block of loan termination (calculated on block basis).
Yes. But please also note supply and borrowing are exclusive choices to the same asset. This means, users can supply one type of asset as collateral and take out loan(s) of different assets. For example, users can supply rETH as collateral to take out a ETH loan, but the same user (address) has to pay off outstanding ETH loans before depositing ETH to earn interest.
No. Anyone can participate with the same level of access, independent from your location, credit score, student loan status, or net worth, without validation of a centralized counterparty.
Interest rates will be algorithmically calculated based on market demands (yields-providing) and supply of assets (asset-providing) in every block (approximately 13 seconds on Ethereum and 3 seconds on Binance Smart Chain).
When an investor supplies a selected crypto asset to dForce Lending, collected funds will be placed into a global lending pool, where borrowers can borrow directly from the pool and pay interest for it. Interests will be distributed to all investors of the same asset on a pro rata basis.
Total Supply*Saving APR+Reserve=Total Borrowing*Borrowing APR
On Liqee, a small fee will be collected from interest spread (borrowing interest minus saving interest) as Reserve, which produces disparity between supply APR and borrowing APR. Accrued fees in Reserve will be utilized to provide additional safeguards to protocol users in extreme events, and facilitate buyback and burning of LQE, or redistribute to LQE holders as a bonus, subject to governance decision.