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S1E14: Liquity & Chicken Bonds

Date
July 18, 2022
Timestamps
0:00 Intro • 2:40 Introduction to Liquity • 6:14 Framework of the base fee • 11:52 How Liquity pivoted to Chicken Bonds • 18:32 Ways to interact with Chicken Bonds • 23:42 How the three buckets work • 27:12 More information about the permanent bucket • 29:05 Where does the extra yield come from? • 35:40 What happens when everyone “Chickens out”? • 38:40 When does rebonding no longer make sense • 40:01 Publius thoughts on Liquity • 49:12 Where is the yield coming from that is not susceptible to impermanent loss? • 53:49 What is the role of LUSD in DeFi? • 56:36 What is the issue with the price? • 1:00:20 Closing thoughts
Type
The Bean Pod

Recordings

Notes (WIP)

Introduction to Liquity

  • Started in mid-2021 as a DeFi lending solution with low, flat fees and censorship resistance.
  • Accepts ETH as collateral to mint the stablecoin LUSD.
  • Core of the protocol exists as immutable smart contracts.
  • High capital efficiency.
  • Users can benefit from liquidations.

Base fee and efficient liquidations

  • Charges a one time fee called the base fee instead of ongoing interest.
  • Makes borrowing costs predictable.
  • If you are going to hold your position for 3 months or more, Liquity will be more cost effective than any other protocol.
  • Due to fast liquidations that are made possible by user funds, Liquity can offer very low collateral ratios.
  • LUSD can be redeemed, in which case it is redeemed from the least collateralized position.

How Liquity pivoted to Chicken Bonds

Ways to interact with Chicken Bonds

How the three buckets work

More information about the permanent bucket

Where does the extra yield come from?

What happens when everyone “chickens out”?

When does rebonding no longer make sense?

Publius thoughts on Liquity

Where is the yield coming from that is not susceptible to impermanent loss?

What is the role of LUSD in DeFi?

What is the issue with the price?