Liquity V2
Liquity V2 is an immutable borrowing protocol on Ethereum where users set their own interest rate and mint BOLD against WETH, wstETH or rETH. DefiLlama recorded about $71.7M on 2026-08-14, below the size floor. We do not open the individual review until it clears that floor. The record includes a February 2025 Stability Pool defect that prompted users to exit and a patched May 2025 immutable redeployment after an audit contest and re-audits. That response is material evidence, but size alone decides this class application today.
- TVL sustained above the retired TVL threshold for 30 days
Watched nightly: a warning on its venues or files, or a cited document that changes, reopens the memo. The first confirmation is due 2026-11-15.
The research file
Mechanism
Borrowers open overcollateralized Troves, choose an annual interest rate and mint BOLD. Lower-rate Troves are redeemed first when holders exchange BOLD for collateral at face value less fees. Stability Pools absorb liquidated debt and receive collateral plus part of borrower interest; uncovered liquidation debt can be redistributed within the collateral branch.
Control and operating record
The current deployment is immutable, so an administrator cannot upgrade collateral branches, oracle choices or core rules. In February 2025 Liquity confirmed a Stability Pool issue that could cause loss, advised immediate exit and replaced the initial deployment. The May redeployment followed a five-week public audit contest, re-audits and testing; Liquity said the original issue had not affected any users.
Exit consequences
BOLD can be sold or redeemed for a mix of WETH, wstETH and rETH, with routing based on branch debt and Stability Pool backing and a variable redemption fee. Traders can front-run redemption transactions, which may return less than requested if configured limits bind. Trove borrowers face liquidation and also redemption of their debt position if their chosen rate is low.
Why the class rule decides
The current aggregate remains below the size floor. We do not open the individual review until the protocol clears it. The incident response, immutability and redemption design deserve full review once the protocol sustains material scale, but they do not waive the standing exit-capacity floor. Crossing it for 30 days reopens the file with the legacy deployment clearly separated from the current contracts.
Research status
This is a capacity-unproven record for Liquity V2, not a quality rejection or approval. Reported TVL says how big the venue is, not what the client owns, who can change the rules, or how a position exits at a proposed size. The individual review opens when the protocol clears the size floor.
Sources
The claims above trace to these. Where a number could not be independently verified, the thesis says so.
- Liquity V2 repository — current mechanism and trust assumptions · primary · accessed 2026-08-14
Supports: Trove mechanics, redemptions, liquidations, immutability, known risks - Liquity — V2 redeployment updates · primary · accessed 2026-08-14
Supports: February 2025 Stability Pool issue, user exit guidance, no known user impact, May 2025 redeployment - Liquity Docs — redemptions and delegation · primary · accessed 2026-08-14
Supports: BOLD redemption, redemption ordering, fees, branch routing - DefiLlama — Liquity V2 survey record · secondary · accessed 2026-08-14
Supports: survey TVL, collateral composition, Ethereum deployment
Inherited controls
The research above describes the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The layer with the most administrative power sets the position’s effective control; that describes control, not quality or suitability.
| Chain | Verdict | Control | Control constraint |
|---|---|---|---|
| Ethereum | Approved | No freeze key | No sequencer, no upgrade key, no operator who can be compelled. Rule changes require social consensus. |