Is Liquity (LQTY) A Good Investment In 2022?

Introduction

Liquity is a decentralized protocol, which enables Ether holders to obtain maximum liquidity against their collateral without paying interest. This protocol offers interest-free collateralized borrowing and DeFi lending. Liquity has seen a surge in usage because of the top-performing decentralized finance (DeFi) lending platforms of 2021. The main reason for high performance is the novel dual-token model that issues both the LUSD stablecoin and the Liquity token (LQTY). Liquity facilitates collateralized loans with a 110% minimum collateral ratio, attracting the attention of DeFi users. It is worth mentioning that the total value locked (TVL) in Liquity Protocol went from $0 to $1 billion in just ten days!

Key benefits of the Liquity Protocol:

• Hard price floor
• Interest-free liquidity
• Low collateral ratio (110%)
• Censorship resistance 
• Governance-free algorithmic monetary policy
• Growth incentives

How Liquity Works?

Liquity is a decentralized borrowing protocol that allows users to draw 0% interest loans against ETH, which is collateral. LUSD (a USD pegged stablecoin) is the coin used to pay out the loans, and a minimum collateral ratio of only 110% is needed to maintain this payment.

To earn ETH and LQTY rewards, users can also deposit LUSD to the Stability Pool. LUSD balances in the Stability Pool will decrease over time as liquidations occur. In return, the protocol will provide users with a pro-rata share of liquidated ETH along with LQTY rewards.

Finally, LQTY holders can stake their tokens to earn a share of borrowing/ redemption fees charged by the protocol, which are distributed to the staking contract by the protocol and accrue in the form of ETH and LUSD.

To use Liquity, which does not host a frontend or product for accessing its protocol, users must do so through a third-party Frontend Operator. Instead, Frontend Operators provide a web interface to the end-user, connecting them to the Liquity protocol and receiving LQTY rewards in return.

Financial Analysis

LQTY started to trade on the market on 2021-05-05. So, it's too soon to talk about LQTY's annual Return On Investment (ROI). However, it is worth mentioning that if you had invested in LQTY a month ago, you could enjoy 44% profit on your investment. Also, the growth of LQTY's ROI in comparison with similar projects is 380% higher. Based on LQTY's market cap chart, it is clear that this coin started a gradually increasing trend in mid-September, 2021. LQTY's market capitalization rank saw a jump, rising from 629 to the approximate rank of 512 at the time of writing this post (11/1/2021)!

The price also saw a similar jump over the same period, going up from ~$4 to $7.25. However, LQTY's liquidity score is 27% below the market's average score, which means that you might face some difficulties selling LQTY in bear markets. It is worth mentioning that LQTY's All-Time High was $146.94 and All-Time Low was reported at $2.85. Also, the CUDOS's price growth over the last year was 7.0%. Also, the overall market cap is reported to be $74,092,280.

Gaining public attention is a critical factor in determining the success of any project. Our data shows that LQTY's popularity on Twitter and Reddit was green over last month, which is reported as 31% and 61%, respectively. However, Telegram's growth was zero.

You are saying that Liquity is the best cryptocurrency to invest in?

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