LiquidDriver is the first liquidity mining protocol providing liquidity-as-a-service (LaaS) in the Fantom ecosystem. The protocol operates as a layer on top of existing DeFi infrastructure. It allows users to strategically point their liquidity across DeFi in a coordinated effort to earn a greater yield than if they deposited directly into the liquidity pool. When users deposit their LP tokens into LiquidDriver, they are paid farming rewards in LiquidDriver’s reward token LQDR. The LPs are then deposited in partner farms to generate yields paid in the native token. 95% of these native farm tokens are sent to the revenue sharing vault to be distributed amongst stakers of LiquidDriver’s governance token xLQDR. The remaining 5% goes to the dev wallet to be used to cover expenses and fund further development.
For example, at the time of writing, if a user deposited into the USDC/FTM pool on SpookySwap they would earn 49% APR paid in BOO farming rewards. By depositing their LP token on LiquidDriver, they would earn 68% APR paid in LQDR. LiquidDriver will farm BOO with the underlying LPs. 95% of this BOO will be sent to the revenue sharing vault to be distributed amongst xLQDR stakers and the remaining 5% goes to the dev wallet.
Why do we need liquidity-as-a-service?
Just to clear things up, when we are discussing liquidity in this article, we are referring to when a liquidity provider funds a liquidity pool with the underlying crypto assets. Liquidity providers are incentivized to fund particular pools with trading fees and farming reward tokens. By providing this liquidity, these investors facilitate trading on automated market maker (AMM) decentralized exchanges. When the liquidity is low for a trading pair, slippage increases and prices become erratic. The result is a poor experience for traders and holders of the tokens. This is why it is crucial that protocols and trading pairs have a suitable amount of liquidity.
The liquidity landscape can often seem monopolistic with early movers achieving dominance. Newer protocols must compete with older protocols that generally have deeper liquidity. This results in lower slippage for traders which attracts more traders and brings in more trading fees, trapping liquidity in a vicious cycle. In order to attract liquidity providers, new projects are forced to offer high APRs propped up by a high token emission rate. Mercenary liquidity is the unfortunate by-product, liquidity which seeks the highest APRs. These users farm the majority of the rewards and then dump the tokens. This selling pressure weakens the purchasing power of the treasury and reduces the value of tokens for long term holders.
With LiquidDriver, projects now have an alternative to printing high emissions of their tokens. Projects can enter into a partnership with LiquidDriver, often by bribing the protocol with their governance tokens. The amount of the bribe is much lower than the cost of high emissions. In return, LiquidDriver will incentivise liquidity providers to the pool by offering a competitive APR paid in LQDR.
This system helps improve the health of the network by routing or “driving” liquidity where it is required. This benefits almost all stakeholders as follows:
- New projects can achieve greater depth of liquidity and higher capital efficiency by partnering with LiquidDriver.
- Liquidity providers will earn greater rewards by staking their LPs with LiquidDriver instead of native farms.
- Traders will experience lower slippage when trading the underlying asset.
- LiquidDriver will accumulate governance tokens for projects and redistribute them to holders of their governance token xLQDR.
- LQDR holders hope to see the token price appreciate as the TVL increases and more rewards are paid to xLQDR token holders.
LiquidDriver has two tokens: a farming reward token LQDR and it’s vested version xLQDR which is used as a governance token. We will also look at liquid inSPIRIT or linSPIRIT which LiquidDriver offers in partnership with Spirit Swap.
LQDR is the reward token that is issued on LiquidDriver. It has no maximum supply and it does not have an official emission schedule. At the time of writing, there are .108 LQDR per block emitted which is roughly 10k LQDR per day. The team will look to reduce emissions in the near future. The team is exploring new ways to increase the value, utility and overall demand of LQDR In order to incentivize more participation in the protocol and to grow their TVL.
xLQDR is a vested version of LQDR similar to xBOO and other xTokens. It is a revenue sharing token designed to give further utility to holders. Currently 95% of the native farm tokens LiquidDriver earns are redistributed to xLQDR holders over time. By locking up their xLQDR, investors can earn regular passive income from a basket of tokens including LQDR, WFTM, linSPIRIT, BOO, SPELL and BEETS.
Users can mint xLQDR by locking their LQDR for a period of 2 week to 2 years directly on the LiquidDriver website. If you are considering minting xLQDR, take note of the following:
- You can lock up your LQDR from 2 weeks ( = 0.02 xLQDR / LQDR) up to 2 years ( = 1xLQDR / LQDR ).
- You can only lock until Thursdays, if you select any other day, it will lock it for the previous Thursday ( e.g if you choose to lock until Friday, June 25th it will lock it until Thursday June 24th )
- As you get closer to your unlocking date, your balance of xLQDR decreases linearly.
- xLQDR is non-transferable
- WARNING : You can only have one locking schedule. It means you cannot lock a share of your LQDR for 1 year and another for 4 months.
- You can extend your locking schedule at any time, but you cannot lock it for more than 2 years since you first locked some LQDR.
Liquid Spirit or linSPIRIT is a wrapped version of SpiritSwap’s inSPIRIT governance token. Users can acquire linSPIRIT through LiquidDriver by depositing their SPIRIT tokens. The SPIRIT tokens are locked forever using a smart contract developed by LiquidDriver. The contract converts SPIRIT into inSPIRIT and perpetually relocks that SPIRIT every 4 years. Voting rights are handed over to LiquidDriver who use this power to increase the APR of their SpiritSwap boosted farm vaults. This allows LiquidDriver to obtain a 2.5x boost on these vaults so that they can offer highly competitive APRs. The main benefit to the user of linSPIRIT over inSPIRIT is that the tokens will be transferable and ‘liquid’, meaning that they can trade it on the open market at their convenience. Users can stake their linSPIRIT directly on LiquidDriver to earn weekly inSPIRT rewards. Another option is to provide liquidity for the linSPIRIT/SPIRIT pair to earn LQDR.
xLQDR is used as the governance token for LiquidDriver. Users can create a new proposal on snapshot with a proposal threshold of 1M xLQDR. Past proposals include accepting bribes from projects, conducting inSPIRIT votes and investing into different DAOs.
The best place to catch the team is within their Discord. Here you can catch the latest announcements, discuss new updates, ask a question or make a suggestion. For more in-depth announcements and educational material, the team uses Medium. You can also follow the team on Twitter which has over 36.3k followers. Another way to keep up to date is on their Telegram which has 2,850 members.
Dr.Liquid studied economics and mathematics. He worked as a business developer for a Fintech venture in Canada for two years before launching his own venture in the Fintech space. Before launching LiquidDriver, he was working for DEUS.finance in financial engineering.
Liquid George worked in marketing & consulting before for startups and companies and has been in the Web3 industry for five years. He is involved in several active or upcoming projects in the DeFi and DAO space, driving business development and team building.
Smartlop is the lead solidity developer. He worked as a software engineer for a tech company before moving to the blockchain industry in 2019, where he worked for Pickle.finance and Harvest.finance before starting LiquidDriver.
LQDR emissions are currently split across 21 liquidity pairs across partners Spirit Swap, SpookySwap and Beethoven-x. There is also a MIM pool in partnership with Abracadabra. The team is most closely aligned with SpiritSwap at the time of writing with over half of all LQDR emissions distributed across 13 SpiritSwap farms in addition to their work on liquid SPIRIT.