WasabiX & Liquity

Overview

Wasabix is thrilled to have this opportunity to collaborate with Liquity, a insanely fast growing lending protocol with low collateral ratio and zero interest. Wasabix is proud to offer Liquity Strategy. with auto-compound function. What is Liquity?

What is Liquity Strategy?

Liquity Strategy is similar to other strategies with add-ons. The add-ons is that Wasabix's frontend app offers full functionality of Liquity with 100% kickback rate.

How to interact with Liquity Strategy?

We've implemented Liquity's functionality into Wasabix's frontend app. With Liquity Trove and Vault, users are able to -
  • Liquity Trove - Deposit ETH and borrow LUSD with 100% kickback rate in Wasabix's frontend app. You may also repay or withdraw your debt, or close your Liquity Trove.
  • Liquity Strategy - Deposit LUSD to Liquity Vault to earn compounded APY. (Details in below)
  • Liquity Minter - Borrow $waLUSD.
  • Stake $waLUSD to maximize your yield reward.

What's in Liquity Strategy?

You will see there are Liquity Trove, Liquity Strategy and Liquity Minter.

What is Liquity Trove?

Liquity Trove is a place where you maintain and manage your loan. Wasabix builds the frontend for them and you are interacting with Liquity's smart contracts directly.
WasabiX does not have the access to Liquity Trove. All ETH collateral are controlled by Liquity.
According to their description:
"Each Trove is linked to an Ethereum address and each address can have just one Trove. If you are familiar with Vaults or CDPs from other platforms, Troves are similar in concept. Troves maintain two balances: one is an asset (ETH) acting as collateral and the other is a debt denominated in LUSD. You can change the amount of each by adding collateral or repaying debt. As you make these balance changes, your Trove’s collateral ratio changes accordingly. You can close your Trove at any time by fully paying off your debt." - from Liquity
Important: If you already have LUSD, you may go to Liquity Strategy and deposit LUSD to receive compounded yield.

What is Liquity Strategy?

Liquity Strategy is the like other strategies in WasabiX. You may deposit LUSD to the Strategy. Once deposit, the deposited assets are deposited into the Liquity stability pool. The yield is harvested from the stability pool. Harvested yield pays down the global debt in the system, reducing all depositor's debt. If you have deposited assets but not borrowed $waLUSD, the yield will credit your account with $waLUSD. We will constantly execute auto-compound in the Vault once LUSD falls into Collector.

Does Wasabix take fee when using the Liquity Strategy?

No. The kickback rate of Wasabix is 100%. It means that Wasabix users would receive 100% of their earned rewards while the frontend receives the remaining 0%.

How exactly does Wasabix execute the compound function?

According to the mechanism from Liquity, over time Stability Providers lose a pro-rata share of their LUSD deposits, while gaining a pro-rata share of the liquidated collateral. However, because Troves are likely to be liquidated at just below 110% collateral ratios, it is expected that Stability Providers will receive a greater dollar-value of collateral relative to the debt they pay off.
Once Wasabix received collateral asset from Stability Pool, it will automatically swap to LUSD to maintain user's total amount of LUSD. The extra LUSD will also be pushed back to the pool to start compound the yield.

Can I lose money by depositing LUSD into the Liquity Strategy?

While liquidations will occur at a collateral ratio well above 100% most of the time, it is theoretically possible that a Liquity Trove gets liquidated below 100% in a flash crash or due to an oracle failure. In such a case, you may experience a loss since the collateral gain will be smaller than the reduction of your deposit.
If LUSD is trading above $1, liquidations may become unprofitable for Stability Providers even at collateral ratios higher than 100%. However, this loss is hypothetical since LUSD is expected to return to the peg, so the “loss” only materializes if you had withdrawn your deposit and sold the LUSD at a price above $1.
Please note that although the system is diligently audited, a hack or a bug that results in losses for the users can never be fully excluded.

What can Wasabix do to protect users from losing money in the Liquity Vault?

Once you deposited LUSD into the vault, the deposited assets are deposited into the Liquity stability pool. Wasabix will implement a monitoring system to constantly check if there's a flash crash coming up or the average CR(Collateral Ratio) is about to below 110%. Wasabix will execute the recall function to protect Wasabix's user from losing money when the system meets conditions in above.

Will $waLUSD always 1:1 to LUSD?

Yes.

How to interact with Liquity in Wasabix?

Please follow the step-by-step guide to learn how to interact with Liquity in Wasabix.