Governance [Summary of all LIP]

Governance
1

The current thread intents to unify all Governance LIP posted on Liquidium Votico for governance and transparency purposes, being always available at Discourse.

LIP will be posted and ordered by date of publication.

2

[LIP1] Early Access to Runes Lending Beta for LIQUIDIUM•TOKEN Holders

Date: 22/07/2024

Results: FOR 99.42% with 35M votes.

Summary

This proposal recommends granting early access to the closed Runes lending beta to holders of LIQUIDIUM•TOKEN. The open beta will commence on July 29th at 12PM UTC. The proposal aims to whitelist LIQUIDIUM•TOKEN holders for instant access to the closed beta.

Motivation

This proposal is about offering early access to the Runes lending feature to LIQUIDIUM•TOKEN holders. This feature allows users to use their Runes as collateral for P2P lending, similar to the existing Ordinals lending on Liquidium. Early access will enable LIQUIDIUM•TOKEN holders to test this new feature before it becomes widely available.

Specification

  • Eligibility: Holders of LIQUIDIUM•TOKEN.

  • Access: Instant access to the closed Runes lending beta.

  • Whitelist: LIQUIDIUM•TOKEN holders will be added to the whitelist for early beta access.

  • Beta Start Date: Closed beta access starts immediately upon approval. Open beta begins on July 29th at 12PM UTC.

Next Steps

  1. Approve the proposal to whitelist LIQUIDIUM•TOKEN holders for early access.

  2. Implement the whitelist for instant access to the closed beta.

  3. Monitor and gather feedback from early users to refine the Runes lending feature before the open beta.

3

[LIP2] Liquidium Inc. as Service Provider

Date: 22/07/2024

Results: FOR 90.72% with 53M votes.

Summary

This proposal is to engage Liquidium Inc., the company currently operating the Liquidium user-interface, as a software development and marketing service provider for the Liquidium project for the next 12 months.

Motivation

By continuing and expanding this partnership, we aim to leverage their expertise and familiarity with the platform to rapidly develop and deploy new features, while also providing software development and marketing support to further Liquidium’s position as a comprehensive liquidity layer on Bitcoin.

Specification

The following are the key deliverables within the 12-month scope:

Software Development

  1. Lending Liquidity Pools for Fungible Tokens

    • Implement Aave-like lending pools on Bitcoin for fungible tokens (e.g., RUNES, BTC)

    • Enable users to lend tokens to earn interest and use them as collateral

    • Allow borrowing against lending positions

    • Aim for best-in-class user experience for fungible token lending

    • Introduce a more capital-efficient model than peer-to-peer loans

    • Enable perpetual loans with reduced lender risk and potentially lower borrower interest rates

  2. Security Module for P2Pool Model

    • Develop a security module as a final protection layer for the pools

    • Allow users to stake tokens in the security module to earn yield while securing the protocol

  3. Instant P2P Loans

    • Implement a system for instant peer-to-peer loans without lender countersignature delays

    • Enable lenders to deposit Bitcoin in a derived address for automatic countersigning

    • Improve user experience and address the issue of ‘dead’ offers in the order book

  4. Loan Extensions

    • Develop functionality for borrowers to request loan extensions

    • Allow lenders to agree to extend loans

    • Implement automatic doubling of loan duration and interest upon mutual agreement

  5. Decentralized Oracle for DLC

    • Create a system allowing multiple participants to run nodes for the oracle

    • Enhance security and reduce centralization of the oracle system

  6. Enhanced Lender Rating System

    • Implement a new rating system with rating buckets

    • Include various factors such as loan rejection rate and time to counter-sign loans

Governance Services

  • Implement governance decisions in alignment with community votes

  • Decentralize the Liquidium ecosystem by assisting other actors to contribute to Liquidum.

Marketing and Support Services

  • Conduct marketing campaigns via X, Discord, and other social media channels

  • Provide customer support to enhance user experience and address inquiries

  • Perform data analytics to inform strategic decisions and product improvements

Integration with Existing Systems

  • All new features will be designed to integrate seamlessly with existing Liquidium offerings

  • The p2pool lending model and instant P2P loans will complement, not replace, the current P2P lending system

  • UI/UX will be carefully considered to ensure new features do not overcomplicate the user experience

Evaluation Metrics

  • Monthly reporting of development progress to the Liquidium community

  • Regular community feedback sessions on new features and improvements

  • Transparent engagement with the community via the governance forum

  • Quarterly reports on marketing efforts and their impact on user growth and engagement

  • Analysis of customer support metrics and user satisfaction

Principles

  • Liquidium Inc. will adhere strictly to its role as a software development and marketing service provider

  • All development and management decisions will prioritize security, robustness, and user experience

  • Liquidium Inc. will engage with the community and other stakeholders following established Liquidium governance procedures

  • Marketing efforts will focus on authentic community growth and education about Liquidium’s features

Next Steps

  1. Engage with the community to refine the proposal

  2. Incorporate feedback and initiate a community vote on the proposal

  3. If approved, formalize the engagement with Fungus Inc. and begin the comprehensive development and management process

Copyright

The text of this proposal is released under the CC0 license. Any visual assets or branding elements remain the property of their respective owners.

4

[LIP3] 25% Point Boost for LIQUIDIUM•TOKEN Borrowing and Lending Activity

Date: 22/07/2024

Results: FOR 88.41% with 55M votes.

Summary

This proposal recommends implementing a 25% point boost for all borrowing and lending activities involving LIQUIDIUM•TOKEN on Liquidium. Borrowers and lenders will earn 25% more points compared to the base points. This point boost can also be applied to other tokens for future marketing campaigns.

Motivation

The point boost aims to incentivize the use of Liquidium platform by enhancing user engagement and activity. Additionally, this strategy can be leveraged for marketing campaigns involving other tokens, providing flexibility for future promotional efforts.

Specification

  • Point Boost: 25% increase in points for borrowing and lending activities involving LIQUIDIUM•TOKEN.

  • Application: The point boost applies to both borrowers and lenders.

  • Flexibility: The point boost mechanism is not exclusive to LIQUIDIUM•TOKEN and can be extended to other tokens for marketing campaigns as needed.

Goal

To encourage greater participation in the Liquidium ecosystem by providing an incentive for using the Liquidium borrow-lend product, while also establishing a flexible framework for future marketing initiatives involving other tokens.

Next Steps

  1. Approve the proposal to implement the 25% point boost for LIQUIDIUM•TOKEN activities.

  2. Update the system to reflect the point boost for all eligible borrowing and lending transactions.

  3. Monitor and evaluate the impact of the point boost on user activity and engagement.

  4. Develop criteria and plans for applying the point boost to other tokens for future marketing campaigns.

5

[LIP4] Liquidium Genesis Airdrop Proposal & Path Forward

Date: 12/08/2024

Results: FOR 86.08% with 40M votes

Liquidium Genesis Airdrop Proposal & Path Forward

We want to address the recent community concerns surrounding our genesis airdrop for the Liquidium Token (LIQUIDIUM•TOKEN). Our objective was to distribute tokens fairly and widely, using a combination of weighted distribution based on user activity points and a minimum token allocation per real active wallet. This approach aimed to maximize exposure and decentralization, which are essential for a governance token.

There were two main concerns voiced by the community over the course of the last few weeks.

  1. Unfortunately, a couple of actors were able to slip through our sybil detection and farm the airdrop. This situation cost 149,800 tokens which was taken from the general airdrop bucket to protocol users, we calculated who it was effectively taken from and you can find the exact breakdown here: https://docs.google.com/spreadsheets/d/1_LvIGTF3lS3jQuZ5-o1acqFBrlRF5QDlMyrUH7GFWQ4/edit?usp=sharing

  2. To ensure a wide distribution of the token we set a minimum amount of tokens per protocol user which effectively “taxed” users with over 95k points leading to a warped distribution. Some community members felt like they would’ve deserved more because they put in more time and resources. While we still think that the broad distribution is positive for the governance token, we acknowledge the taxation could’ve been less intense.

Over the past several weeks, we have been working diligently to develop a plan to rectify this situation and realign incentives.

Sybil Attack Impact: The sybil attack allowed a small number of actors to bypass our detection mechanisms and unfairly claim a disproportionate amount of tokens. This resulted in an imbalance, as tokens intended for a wider distribution were instead allocated to these sybil addresses.

Taxation Impact: Compared to a linear distribution where points and tokens are proportional, we introduced a small adjustment for users with more points. This adjustment was used to distribute a baseline token stake to users with fewer points. Essentially, the top users had the highest “adjustment.”. The idea behind the taxation was to distribute the tokens to more users to create a higher degree of decentralization, which is generally beneficial to governance tokens.

Here is the plan to address the issue:

Step 1: Remuneration of Sybil Tokens

Allocation of Sybil Tokens: After retrospectively detecting all sybil addresses, the total amount of tokens initially given to sybil addresses with less than 1,000 points was 149,800 tokens. Each of these 749 sybil addresses received 200 tokens, adjusted from users with more points. To address this, we will redistribute these 149,800 tokens to the users who were impacted by the sybil activity. The tokens will be taken from the founders’ token allocation to A) show dedication from the founding team to rectify this issue and B) to not impact the treasury allocation for future purposes.

Purpose: To recognize and compensate users impacted by the sybil activity.

Timing: The additional tokens will be distributed at the end of the next season, supplementing the regular seasonal airdrop allocation. This means that affected users will receive their usual seasonal airdrop, plus this extra allocation on top of it, ensuring they benefit from both distributions.

Pros:

  • Direct compensation to users affected by the sybil activity.

Cons:

  • Potential for market dilution, leading to selling pressure.

Step 2: Broader Point Multiplier

Point Multiplier Based on Impact: A point multiplier/boost for our most active genesis users in Season 1 as a gesture of appreciation and to reward continued engagement.

Purpose: To recognize our most important users and incentivize continued engagement for users who were most affected by the taxation impact.

Multiplier Structure:

  • Top 100 users: 30% boost

  • Top 200 users: 25% boost

  • Top 500 users: 20% boost

  • Top 850 users: 15% boost

  • Top 1500 users: 10% boost

  • Top 3000 users: 5% boost

These point multipliers apply only to Season 1 and are designed to compensate for the taxation impact. With 1.5 million tokens available for airdrop in Season 1, this multiplier gives affected users a significant advantage, boosting their opportunity to earn more tokens throughout the season. The boosts will apply retroactively to the beginning of Season 1 (July 21, 2024, 12PM UTC) and will last until the end of Season 1 (September 21, 2024, 12PM UTC).

Pros:

  • Provides significant incentives for top users to continue contributing.

Cons:

  • Could discourage new participants who feel at a disadvantage.

Future Plans

Future token distributions will be linear, directly rewarding more engagement without any adjustments or minimum token allocations per wallet. Our primary goal with the Liquidium Token is to serve the community. After carefully considering all user feedback and proposed solutions, we believe taking these steps is the best path forward due to its ability to continuously incentivize new volume while compensating for the sybil attack. We are committed to demonstrating our dedication by sharing our own (Founders’) tokens with our most valuable users.

We are excited about the future of Liquidium, both in terms of token utility and product development. We are happy that so many of you share our enthusiasm and look forward to continuing this journey together.

Thank you for your continued support.

Additional Notes:

  • Transparency: We have provided a spreadsheet showing the exact genesis airdrop token distribution and how the remuneration for sybil activities will affect it, including the sybils we detected retroactively.

  • Engagement: We invite feedback and discussion to ensure that our community remains informed and engaged in this process.

6

[LIP5] Implementation of Tiered Platform Fee Discounts for Token Holders

Date: 17/08/2024

Results: FOR 92.77% with 12M votes

Summary

This proposal aims to introduce a tiered discount system for platform fees based on the number of tokens held by borrowers. The current platform fee is 20% of the interest. The proposed discount tiers will range from 0% to 25%, giving additional incentives to token holders and fostering a stronger community and token economy.

Rationale

Introducing a tiered discount system for platform fees will provide several benefits:

  • User Incentivization: Rewards loyal users, enhancing user satisfaction and retention.

  • Economic Growth: Stimulates more transactions on the platform, potentially increasing overall revenue despite the reduced fees per transaction.

Proposed Discount Tiers

The discount on the platform fee (currently at 20% of the interest) will be based on the amount of tokens held by the user. The proposed tiers are as follows:

Token Holdings (X Tokens) Discount on Platform Fee (%) Effective Platform Fee (%)
0 - 399 0% 20%
400 - 1199 5% 19%
1200 - 2399 10% 18%
2400 - 3999 15% 17%
4000 - 7999 20% 16%
above 8000 25% 15%

Implementation Details

  • Eligibility: Discounts will be automatically applied based on the user’s token balance at the time of the transaction.

  • Verification: The platform will verify token holdings in real-time through blockchain data to determine the appropriate discount tier at the time of accepting an offer. When the borrower accepts a loan, the platform will determine the exact discount tier. When the borrower repays a loan, the platform verifies that the user is still holding at least the minimum for that discount tier. Meaning, users need to hold at least the minimum value when accepting AND when repaying for the discount to be added. Acquiring more tokens after the loan has been accepted will not increase the discount percentage.

  • Review: The discount tiers and their effectiveness will be reviewed quarterly to ensure they meet the desired goals of increased platform activity.

Benefits

  • For Users: Reduced fees encourage more transactions and reward loyalty.

  • For the Platform: Increased platform activity can offset the reduced fee percentages through higher transaction volumes.

Note: This proposal only applies to users borrowing on Liquidium. It is planned for a similar governance proposal to be released that focuses on lender bonuses with Liquidium tokens.

7

[LIP6] Multiple Loan Duration Options for OCM Collections

Date: 13/11/2024

Results: FOR 90.94% with 28M votes

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Summary

This proposal aims to implement multiple loan duration options (5, 10, and 16 days) for OCM Genesis by OnChainMonkey and OCM Dimensions 300 collections on Liquidium. Currently, these collections only offer a single loan duration determined by the Liquidium risk algorithm. This change will align with the recently implemented multiple duration features available on other collections, which have shown improved performance after implementation.

Rationale

Adding multiple loan duration options will provide several benefits:

  • Enhanced Flexibility: Gives borrowers more control over their loan terms

  • Platform Consistency: Aligns OCM collections with other collections on the platform

  • Increased Activity: More options may lead to higher borrowing volume, as demonstrated by other collections

  • User Experience: Better serves different borrower needs and timeframes

Proposed Changes

The following loan duration options will be made available for both OCM Genesis by OnChainMonkey and OCM Dimensions 300:

  • 5 days

  • 10 days

  • 16 days

Implementation Details

  • Collections Affected: OCM Genesis by OnChainMonkey and OCM Dimensions 300

  • Risk Parameters: The Liquidium risk algorithm will determine appropriate interest rates for each duration option

  • UI Changes: The platform interface will be updated to display all duration options for OCM collections

Historical Context

  • Other collections that implemented multiple loan durations have shown improved performance in terms of volume

  • While there might be concerns about splitting liquidity, especially given OCM’s recent lower volume, this hasn’t been observed as an issue with other collections that implemented multiple durations

What it would look like in practice

Current Model:

  • Borrower can only select one predetermined loan duration

  • Interest rate is determined based on the risk parameters

  • Limited flexibility for borrowers

Proposed Changes:

  • Borrowers can choose between 5, 10, or 16-day loans

  • Interest rates will be optimized for each duration option based on risk parameters

  • More flexibility to match borrower needs

  • Consistent with other collections on the platform

Benefits

  • For Borrowers: Greater flexibility in loan planning and management

  • For the Platform: Increased competitiveness and standardization across collections

  • For the Community: Enhanced user experience and potential for increased activity

Note: This proposal focuses solely on implementing multiple loan durations for OCM collections. The interest rates will be determined by the Liquidium risk algorithm for each duration option.

8

[LIP7] Early Access Program for Instant Loans

Date: 19/11/2024

Results: FOR 100% with 46M votes

Summary

This proposal aims to implement an early access program for LIQUIDIUM•TOKEN holders to beta test the new Instant Loans feature before public release. During this period, eligible token holders will have exclusive access to test the platform’s new automated lending system.

Rationale

Implementing an early access program will provide several benefits:

  • Token Utility Enhancement: Provides exclusive utility to LIQUIDIUM•TOKEN holders

  • Quality Assurance: Allows for controlled testing with our most engaged users

  • Community Engagement: Gives token holders direct input in platform development

  • Risk Management: Enables identification and resolution of potential issues before public launch

Proposed Changes

The following early access privileges will be granted to eligible token holders:

  • Temporary exclusive access to Instant Loans feature

  • Ability to test automated lending on runes

  • Direct feedback channel to development team

  • Priority support during the testing period

Implementation Details

  • Eligibility: Minimum 5,000 LIQUIDIUM•TOKEN holdings

  • Duration: minimum of 2 weeks of exclusive access

  • Scope: Limited to Runes initially

  • Access Control: Wallet verification

Historical Context

  • Previous feature launches have benefited from controlled rollouts

  • Token holder early access programs have proven effective in other DeFi platforms

  • Feedback from engaged users has historically led to improved feature implementation

What it would look like in practice

Current Model:

  • All users wait for public release

  • No structured beta testing phase

  • Limited early feedback opportunities

Proposed Changes:

  • Token holders get a minimum 2-week head start

  • Structured feedback collection process

  • Controlled environment for initial testing

  • Smooth transition to public release

Benefits

  • For Token Holders:

    • Early access to new feature

    • Direct input on platform development

    • Familiarity with new feature

  • For the Platform:

    • Controlled testing environment

    • Quality feedback from engaged users

    • Reduced risk of launch issues

  • For the Community:

    • More stable public release

    • Better tested features

    • Enhanced platform security

Note: This proposal focuses solely on implementing the early access program for Instant Loans. The feature’s core functionality and risk parameters will remain as designed by the Liquidium team.

9

[LIP-8] Adjustments to Liquidium Token Emission and Point Seasons

Date: 11/12/2024

Results: Extend Point Seasons & Spread Emissions 83.44% with 144M votes

Purpose: This proposal addresses the community’s concerns regarding token selling pressure from the emissions in Points Seasons 1 and 2. It aims to ensure sustainable growth, reduce selling pressure on the LIQUIDIUM•TOKEN, and maintain the platform’s user engagement and expansion. This proposal offers multiple strategies for managing token distribution and invites token holders to vote on their preferred approach.

Background:

  • Point Seasons Impact: Seasons 1 and 2 emitted 1.5 million LIQUIDIUM•TOKENs. While this incentivized significant user growth and platform activity, it also contributed to increased selling pressure.

  • Current Plan: Season 3 is scheduled to emit another 1.5 million tokens, and it is the final planned season.

  • Points’ Success: Points have proven to be an effective tool for attracting users and driving platform engagement, contributing to Liquidium’s growth as a leading Bitcoin-based lending protocol.

Options for Voting:

  1. Reduce Token Allocation for Season 3

    • Decrease Season 3 emissions from 1.5 million to a lower amount (e.g., 750,000 tokens).

    • Benefits:

      • Immediate reduction in selling pressure.

      • Retains user incentives, albeit at a reduced level.

    • Drawbacks:

      • May result in slightly decreased user engagement during Season 3.

  2. Extend Point Seasons to Spread Emissions

    • Introduce three additional seasons (Seasons 4, 5, and 6). Distribute the remaining 1.5 million tokens equally across Seasons 3, 4, 5, and 6, allocating 375,000 tokens per season.

    • Benefits:

      • Sustains user engagement and platform growth over a longer period.

      • Gradually reduces the token emission rate to mitigate selling pressure.

    • Drawbacks:

      • Extends token distribution, delaying the full transition to other reward mechanisms.

  3. Eliminate Season 3

    • Cease point emissions entirely after Season 2.

    • Benefits:

      • Drastically reduces selling pressure from token emissions.

      • Allows for immediate exploration of alternative user incentive strategies.

    • Drawbacks:

      • Loss of a proven user acquisition and retention mechanism.

      • Potential drop in platform activity without immediate replacement incentives.

  4. Hybrid Approach

    • Reduce Season 3 emissions to 750,000 tokens and introduce Seasons 4 and 5 with 375,000 tokens each.

    • Benefits:

      • Balances immediate reduction in emissions with sustained long-term engagement.

    • Drawbacks:

      • Requires careful implementation to balance user expectations.

  5. Keep it as is (no change)

Community Considerations:

  • Selling Pressure vs. Growth: While token emissions have driven growth, the selling pressure has raised concerns.

  • User Retention: Points have been a vital tool for user acquisition and retention. Cutting seasons entirely may risk losing momentum.

  • Future Plans: This proposal aligns with Liquidium’s long-term goals of fostering a decentralized and vibrant community.

Implementation Details:

  • Eligibility: All LIQUIDIUM•TOKEN holders can vote. Voting power is proportional to token holdings.

  • Outcome Implementation: The Liquidium contributors will execute the community’s decision promptly and transparently.

10

[LIP9] Multiple Loan Duration Options for Fomojis

Date: 09/01/2025

Results: FOR 97.83% with 55M votes

Summary

This proposal aims to implement multiple loan duration options (5, 10, and 16 days) for the Ordinals collections Fomojis and Fomojis 2.0 (together hereafter referred to as “Fomojis”) on Liquidium. Currently, this collection only offers a single loan duration determined by the Liquidium risk algorithm. This change will align with the recently implemented multiple duration features available on other collections, which have shown improved performance after implementation.

Rationale

Adding multiple loan duration options will provide several benefits:

  • Enhanced Flexibility: Gives borrowers more control over their loan terms

  • Platform Consistency: Aligns Fomojis with other collections on the platform

  • Increased Activity: More options may lead to higher borrowing volume, as demonstrated by other collections

  • User Experience: Better serves different borrower needs and timeframes

Proposed Changes

The following loan duration options will be made available for Fomojis:

  • 5 days

  • 10 days

  • 16 days

Implementation Details

  • Collections Affected: Fomojis

  • Risk Parameters: The Liquidium risk algorithm will determine appropriate interest rates for each duration option

  • UI Changes: The platform interface will be updated to display all duration options for Fomojis

Historical Context

  • Other collections that implemented multiple loan durations have shown improved performance in terms of volume

  • While there might be concerns about splitting liquidity, especially given Fomojis generally lower volume compared to other blue-chip collections, this hasn’t been observed as an issue with other collections that implemented multiple durations

What it would look like in practice

Current Model:

  • Borrower can only select one predetermined loan duration

  • Interest rate is determined based on the risk parameters

  • Limited flexibility for borrowers

Proposed Changes:

  • Borrowers can choose between 5, 10, or 16-day loans

  • Interest rates will be optimized for each duration option based on risk parameters

  • More flexibility to match borrower needs

  • Consistent with other collections on the platform

Benefits

  • For Borrowers: Greater flexibility in loan planning and management

  • For the Platform: Increased competitiveness and standardization across collections

  • For the Community: Enhanced user experience and potential for increased activity

Note: This proposal focuses solely on implementing multiple loan durations for Fomojis. The interest rates will be determined by the Liquidium risk algorithm for each duration option.

11

[LIP-10] Adjustment of Loan Term for Ordinal Maxi Biz (OMB) Collection

Date: 25/02/2025

Results: For 94.94% with 64M votes

1. Summary

This proposal seeks to replace the current 10-day loan term for the Ordinal Maxi Biz (OMB) collection with a 30-day term. Additionally, the 5-day loan term will be replaced with a 7-day term to better accommodate market preferences. Data analysis has shown that the 16-day term has been the most utilized duration for OMB loans, indicating a strong market preference for longer loan terms. Given the limited use of shorter durations and the clear demand for extended terms, this proposal suggests the introduction of a 30-day loan term instead of retaining the 10-day option and replacing the underperforming 5-day term with a 7-day option.

2. Rationale

2.1 Market-Driven Decision

Our analysis of loan term usage within the Liquidium platform has demonstrated a consistent preference for longer terms. Specifically, for the OMB collection, the 16-day term significantly outperformed shorter durations, while the 5-day and 10-day terms saw minimal adoption.

Given this trend, our goal is to align loan durations with market demand. Instead of maintaining underutilized 5-day and 10-day terms, we propose introducing a 30-day term as a longer-term alternative and replacing the 5-day term with a 7-day term to provide a better transition for those who preferred shorter durations. This will provide users with a broader range of viable lending options while enhancing capital efficiency within the ecosystem.

The chart below illustrates the current loan term adoption across various blue-chip collections, reinforcing the preference for longer durations:

https://ibb.co/R4czxCdZ

3. Details

3.1 Proposed Change

  • Remove the 10-day loan term for the OMB collection and replace it with a 30-day loan term, providing a new long-term lending option.

  • Replace the 5-day loan term with a 7-day loan term to better bridge the gap between shorter and mid-length durations.

  • Maintain the existing 16-day loan term to ensure flexibility for borrowers and lenders.

3.2 Pilot Program

  • The implementation of the 30-day and 7-day terms for OMB will serve as a pilot initiative.

  • If well-received by the community and market participants, we will explore extending 30-day loan terms to additional blue-chip collections.

4. Implementation

  • Upon approval, the 5-day and 10-day loan terms will be removed and the 7-day and 30-day loan terms will be introduced within 48h.

  • Performance will be monitored over a three-month period to assess market response and determine feasibility for broader application.

5. Legal Disclaimer

The Liquidium Foundation is committed to regulatory compliance and adherence to applicable laws. Any governance proposal that is deemed to violate legal, regulatory, or compliance requirements may not be implemented. The Foundation reserves the right to seek legal or regulatory guidance before executing any proposed changes.

12

[LIP-11] Implementation of Algorithm V2 for APY and Loan Terms Determination

Date: 21/03/2025

Results: FOR 100% with 61M votes.

1. Summary

:pushpin: For full details on Algorithm V2, refer to the complete documentation here.

Algorithm V2 significantly enhances Liquidium’s risk assessment and loan optimization framework. While Algorithm V1 relied primarily on historical floor price deviations, the Coefficient of Variation (CV), and weighted trading volumes, Algorithm V2 integrates real-time market indicators and decouples APY and loan terms for a more flexible and adaptive approach.

Key Improvements in Algorithm V2:

  • Real-Time Offer Data: Incorporates recent offer activity to compute Loan-to-Value (LTV), lender rating, and activated loan volume dynamically.

  • Enhanced Liquidity Metrics: Uses both raw and adjusted liquidity (weighted by LTV and lender rating) to capture market availability more accurately.

  • Utilization Rates: Introduces standard and adjusted utilization rates to gauge liquidity deployment and market participation.

  • Multi-Tier Term Structure: Separates loan terms into short, medium, and long durations instead of using a single-term output.

  • Decoupled APY and Term Calculations: Determines APY and loan durations independently, allowing for more precise risk-adjusted lending conditions.

  • Comprehensive Risk Integration: Combines historical floor analysis (CV, deviation percentage) with real-time market factors to create a multi-dimensional risk model.

2. Rationale

2.1 Limitations of Algorithm V1

  • Narrow Data Scope: Relied on 30-day historical floor price data, causing delayed risk adjustments and lack of real-time market behavior reflection.

  • Coupled APY and Loan Term Calculations: Interdependent APY and loan terms limited flexibility.

  • Single-Tier Loan Terms: Produced a single term duration, failing to adapt to different market conditions.

2.2 Advancements in Algorithm V2

  • Broader Data Integration: Incorporates real-time offer activity (last 7 days) to compute LTV and lender rating, providing real-time borrower and lender insights.

  • Utilization Metrics: Calculates standard & adjusted utilization rates to assess active liquidity deployment.

  • Enhanced Risk Analytics: Integrates historical floor price measures with real-time weighted volume and utilization rates.

  • Decoupled and Multi-Tiered Decision Logic:

    • APY Determination: Uses weighted volume thresholds, default rates, available liquidity, and utilization rates.

    • Loan Term Determination: Separates term calculation from APY and assigns Short, Medium, or Long durations based on risk factors.

3. Details

3.1 Real-Time Offer and Liquidity Integration

  • Offer Data Collection: Aggregates recent offer data to calculate LTV and lender ratings.

  • Liquidity Metrics: Uses both raw liquidity (total offers) and adjusted liquidity (LTV and lender rating-weighted) to provide precise market capital assessment.

3.2 Utilization-Based Risk Adjustment

  • Utilization Rates: Calculates standard and adjusted utilization rates, measuring active liquidity deployment.

3.3 Advanced Floor Price Analytics

  • Historical Analysis: Computes average floor price, deviation percentage, and CV for market volatility insights.

  • Integration with Current Data: Merges historical risk factors with real-time weighted volume and utilization rates.

3.4 Decoupled and Granular Decision Logic

  • APY Adjustments: Determines APY based on:

    • Weighted Volume

    • Default Rate (DF) & Available Liquidity

    • Utilization Rates

  • Multi-Tier Loan Term Structure:

    • Short, Medium, and Long-term options determined by Default Rate, External Weighted Volume, and CV.

4. Implementation

4.1 Deployment Steps

  1. Backtesting & Validation

    • Test loan term and APY accuracy under various market conditions.

  2. Algorithm Deployment via Cron

    • Automate APY and loan term calculations using backend cron jobs.

  3. Live Deployment & Monitoring

    • Phase-wise rollout with governance oversight.

  4. Governance-Based Adjustments

    • Modify parameters based on performance and community voting.

5. Legal Disclaimer

The Liquidium Foundation is committed to regulatory compliance and adherence to applicable laws. Any governance proposal that is deemed to violate legal, regulatory, or compliance requirements may not be implemented. The Foundation reserves the right to seek legal or regulatory guidance before executing any proposed changes.

13

[LIP-12] LIQUIDIUM•TOKEN Revenue Sharing & Staking Mechanism

Date: 06/05/2025

Results: FOR 100% with 216M votes

1. Summary

This proposal introduces a staking mechanism for LIQUIDIUM•TOKEN (LIQ) that allows holders to stake their tokens and earn rewards derived from protocol revenue. The system utilizes a 30% daily revenue buyback model, purchasing tokens from centralized exchanges (CEXes) via a market maker and distributing them to stakers. The remaining 70% of revenue covers operational expenses.
The primary objectives of this proposal are to:

  • Incentivize long-term holding of LIQ.

  • Create sustainable buyback-driven demand.

2. Rationale

2.1 Enhancing Token Utility and Stability

By allowing holders to stake LIQUIDIUM•TOKEN (LIQ) and earn rewards directly from protocol revenue, this proposal establishes a sustainable incentive model that aligns with Liquidium’s long-term vision. The buyback-and-distribute approach leverages organic demand rather than inflationary emissions, fostering token scarcity and economic sustainability.

2.2 Strengthening the Ecosystem

Introducing a staking mechanism complements Liquidium’s existing DeFi framework by rewarding active participants and ensuring alignment between token holders and the protocol’s growth trajectory.

3. Details

3.1 Staking Mechanism

  • Holders stake LIQ through the Liquidium Foundation website.

  • Auto-compounding: Staked rewards automatically reinvest within an ICP canister.

  • Unstaking Cooldown: A 7-day cooldown period applies, during which no rewards accrue. This measure prevents panic selling and mitigates market volatility.

3.2 Buyback & Distribution

  • 30% of daily protocol revenue is allocated to daily buybacks.

  • Daily buybacks are executed on CEXes via a market maker.

  • Purchased tokens are stored in an ICP canister for daily distribution to stakers.

  • The allocation percentage can be adjusted via future governance proposals.

3.3 Liquid Staking with STAKED•LIQUIDIUM

  • Holders receive STAKED•LIQUIDIUM (sLIQ) upon staking, representing a share in the staking pool.

  • LIQ/sLIQ conversion rate increases automatically with compounded rewards.

  • sLIQ Use Cases:

    • Fee rebates

    • Governance voting power

    • Redemption of LIQ Tokens

4. Implementation

4.1 Technical Considerations

  • L1 Bitcoin User Experience:

    • The entire staking experience will be on L1 Bitcoin, allowing holders to connect using their existing Bitcoin wallets.

    • Holders will receive their STAKED•LIQUIDIUM (sLIQ) directly in their Bitcoin wallets.

    • ICP will only handle the staking logic in the background, ensuring seamless operation.

  • ICP Canister Storage:

    • Tracks staked tokens and buyback-purchased tokens.

    • Allows virtual compounding without gas fees.

  • Unstaking Handling:

    • Unstaked tokens are transferred to a separate contract immediately to halt further rewards.

    • After 7 days, holders can withdraw their tokens.

4.2 Security Measures

  • The staking smart contract will undergo a full security audit.

  • Initial support for LIQ on Bitcoin Layer 1 (L1 BTC) with potential expansion to other chains.

5. Legal Disclaimer

The Liquidium Foundation is committed to regulatory compliance and adherence to applicable laws. Any governance proposal that is deemed to violate legal, regulatory, or compliance requirements may not be implemented. The Foundation reserves the right to seek legal or regulatory guidance before executing any proposed changes.

14

[LIP-13] Update Ordinals Loan Term Options from 3-5-7 to 5-7-10 Days

Date: 08/07/2025

Results: FOR 95.83% with 65M votes.

1. Summary

This proposal recommends removing the 3-day loan term and updating the standard loan duration options on the Liquidium platform from 3-5-7 days to 5-7-10 days. Since introduction on 26 May, the 3-day term accounts for only 1.85% (0.23 BTC) of volume relative to the combined volume of 3-, 5-, and 7-day terms (12.324 BTC), and 0.634% of volume when compared to all loan terms on the platform. It also represents only 8.3%(137) of the total loan count among the 3-5-7 day range (1653), highlighting its underperformance.

The change is proposed to streamline available durations and better reflect current user behavior.

2. Rationale

2.1 Underutilization of 3-Day Term

Recent platform analytics reveal that the 3-day loan term accounts for only 8.3% of loan count and an even lower 1.85% of volume compared to the 3-5-7 term set, or just 0.634% across all durations. This low adoption indicates limited demand and misalignment with borrower and lender preferences, likely due to the compressed time frame and suboptimal interest potential.

2.2 Consolidating to Higher Demand Durations

By focusing on the more popular 5- and 7-day durations and introducing a 10-day option, the platform will align better with user demand. This creates a more attractive and operationally efficient environment, while also potentially enhancing the utility of Liquidium’s point-based reward system by encouraging longer, more productive loans.

3. Details

3.1 Proposed Change

  • Remove the 3-day loan term from the loan creation UI.

  • Maintain the 5-day and 7-day terms.

  • Introduce a new 10-day term option for both borrowers and lenders.

3.2 Effects on Points and Rewards

Under the Liquidium points ruleset, loans with durations under 5% utilization are disqualified from earning rewards. The 3-day term is especially susceptible to this threshold, diminishing its reward potential and contributing to lower usage. Removing it will reduce accidental forfeitures of points and simplify the user experience.

4. Implementation

4.1 Rollout Plan

  • Fungus Inc. will execute the update to the loan creation interface.

  • Changes to backend validation logic and the UI will be deployed in the next biweekly release cycle.

  • Communication will be shared with the community 72 hours prior to rollout.

4.2 Supporting Analytics

The following graphics provide the visual basis for the proposed change:

  • Loan Volume Distribution by Term (case against 3 days)
    ![][image1]

  • Loan Count Distribution by Term (case against 3 days)
    ![][image2]

  • Loan Volume Distribution by Term (case for 10 days)
    ![][image3]

5. Legal Disclaimer

The Liquidium Foundation is committed to regulatory compliance and adherence to applicable laws. Any governance proposal that is deemed to violate legal, regulatory, or compliance requirements may not be implemented. The Foundation reserves the right to seek legal or regulatory guidance before executing any proposed changes.

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