1. Summary
This proposal updates the LIQUIDIUM•TOKEN (LIQ) economics:
- Staking allocation: reduce the share of Liquidium.WTF’s current protocol revenue streams allocated to the sLIQ program from 30% to 20%, measured after holder discounts.
- Burn component: split the allocation 50/50 between staking rewards and a permanent burn.
- Monthly cap: limit treasury-funded LIQ for rewards and burns combined to 250,000 LIQ per month. At current prices the cap applies, which means about 125,000 LIQ for staking rewards and 125,000 LIQ for burns per month, compared with roughly 400,000 to 650,000 LIQ per month sent to stakers recently.
- Discount tiers: raise the holdings required for each borrower discount and lender bonus tier by 18×, count sLIQ in full and LIQ at 50%, and review thresholds quarterly.
Staking, unstaking and withdrawals continue unchanged.
2. Rationale
Lower net issuance from treasury reserves. LIP-12 directs a share of daily loan fees to acquire LIQ for sLIQ holders. Because sell-side liquidity has been limited, most of that allocation has been funded from treasury LIQ instead of market purchases. In September 2026, about 86% of LIQ sent to the staking contract came from treasury reserves. The allocation is set in USD and converted to LIQ, so a lower price increases the number of tokens released. The lower allocation and the monthly cap limit this.
Burns. Half of the allocation is burned instead of distributed. LIQ bought on the open market is burned first; when market purchases fall short, treasury LIQ is burned instead. Burning reduces total supply and the treasury’s future inventory, and every burn is verifiable on-chain.
Keep a reason to stake. Roughly 17% of LIQ supply is staked. Ending rewards entirely would remove the main incentive to stake, so rewards continue at a lower, more sustainable level.
Discount tiers no longer match the token’s value. The current thresholds were set under LIP-14 (effective September 29, 2025), when LIQ traded around $0.155 and the top tier (12,000 LIQ) represented roughly $1,900. At recent prices of about $0.0055, the same tier costs under $100. Many users hold the exact minimum, and the monthly fee reduction a top-tier user receives can exceed the cost of the required tokens. In Q3 2026, roughly a quarter of all Liquidium.WTF repayment fees were returned as holder discounts and bonuses.
Favor staked holdings. Counting sLIQ in full and LIQ at half weight rewards holders who stake, which reduces liquid supply.
Measure fees after discounts. Defining the fee base after holder discounts ties the allocation to revenue the protocol actually keeps.
3. Details
3.1 Staking allocation and burn
- Fee base: all current protocol revenue streams of Liquidium.WTF, after borrower discounts and lender bonuses: activation fees and repayment (platform) fees on loans on Bitcoin, Robinhood Chain and Ethereum. The fee base covers the revenue streams listed above; including other revenue streams requires a separate proposal.
- Allocation: 20% of the fee base, split 50% to staking rewards and 50% to burns.
- Sourcing: LIQ bought on the open market goes to the burn first. Whatever is still needed for either half comes from treasury LIQ, within the monthly cap.
- Monthly cap: treasury-funded LIQ for rewards and burns combined is capped at 250,000 LIQ per calendar month. If the cap is reached, the treasury-funded amounts for rewards and burns are reduced by the same proportion. LIQ bought on the market does not count toward the cap.
- Pricing: USD amounts are converted to LIQ using a reference price set by the Foundation from executable market prices, for example the lowest substantial ask on a listed exchange. The price source may change over time.
- Burns: executed on-chain to a provably unspendable output, so anyone can verify them with a Bitcoin runes explorer.
- No guaranteed rewards: staking rewards depend on realized fees and are not guaranteed. Their amount may vary month to month and may be changed through governance.
- Existing positions: sLIQ balances, accrued rewards, and unstaking and withdrawal rights are unaffected.
3.2 Holder discount and bonus tiers
Tier percentages remain unchanged. Required holdings increase 18× and are measured as an eligible balance:
Eligible balance = sLIQ held + 50% of LIQ held. sLIQ is counted by the number of sLIQ tokens held.
For example, 180,000 sLIQ and 72,000 LIQ give an eligible balance of 216,000, which reaches the top tier. A holder with only unstaked LIQ needs twice the threshold: 432,000 LIQ for the top tier.
| Discount / bonus | Current threshold | New threshold (eligible balance) |
|---|---|---|
| 0% | 0 – 599 | 0 – 10,799 |
| 5% | 600 – 1,799 | 10,800 – 32,399 |
| 10% | 1,800 – 3,599 | 32,400 – 64,799 |
| 15% | 3,600 – 5,999 | 64,800 – 107,999 |
| 20% | 6,000 – 11,999 | 108,000 – 215,999 |
| 25% | ≥ 12,000 | ≥ 216,000 |
New thresholds apply to loans accepted on or after the effective date. Loans accepted earlier keep the thresholds recorded at acceptance.
3.3 Quarterly threshold review
As set out in LIP-5, the tier thresholds are reviewed every quarter. At each review, the Foundation may rescale all thresholds by the same factor, without a new vote, so that the top-tier threshold is worth approximately USD 1,200 at the 30-day average LIQ price. Tier percentages may not be changed under this rule. Adjustments are announced before they take effect and apply only to loans accepted afterward.
4. Implementation
4.1 Timeline
- Discussion: October 13, 2026 → October 20, 2026 on forum.liquidium.org
- Voting: October 20, 2026 → October 27, 2026 on Votico
- Effective date: November 1, 2026, unless legal or operational review requires a different date.
4.2 Transparency
Staking rewards and burns are on-chain transactions that anyone can verify. The Foundation may also make program data available, for example on a public dashboard. The DAO may revise or revert these parameters through a later proposal.
4.3 Relationship to prior proposals
This proposal amends the allocation established under LIP-12 and the tier thresholds in LIP-14 §3.1. All other parameters of LIP-12 and LIP-14 remain in effect.
If governance later approves a successor to LIQUIDIUM•TOKEN, these parameters carry over to it unless that proposal states otherwise. LIQ-denominated amounts, such as the monthly cap and the tier thresholds, scale by the conversion ratio.
4.4 Governance and eligibility
Voting is conducted on Votico. All LIQUIDIUM•TOKEN and STAKED•LIQUIDIUM holders are eligible to vote, with voting power proportional to holdings. Liquidium contributors may vote with tokens they hold. LIQ held in the Liquidium treasury will not be used to vote.
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. Nothing in this proposal constitutes a statement or promise about the future price or value of LIQUIDIUM•TOKEN or STAKED•LIQUIDIUM.