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Summary of LIQ Protocol
Key Points
- LIQ Protocol is an on-chain liquidation protocol for Serum DEX margin markets and lending platforms on Solana network.
- It provides liquidity through its engines to manage liquidations full-time for Solana and Serum-based margin/borrowing projects.
- The protocol strengthens the Serum Ecosystem by handling liquidation events and keeping margin accounts balanced on different lending platforms.
Numbers and Figures
- 50,000: transactions per second handled by Solana with near-zero latency.
- 700,000: theoretical maximum transactions per second of Solana.
Case Studies and Examples
Introducing LIQ Protocol: A Revolutionary DeFi Solution
LIQ Protocol is a cutting-edge, on-chain liquidation protocol specifically designed for Serum DEX margin markets and lending platforms, seamlessly integrated within the Solana network.
The protocol furnishes liquidity through its engines, providing around-the-clock management of liquidations for Solana and Serum-based margin and borrowing projects, thereby enabling these projects to establish a robust backend infrastructure for handling settlement liquidity with confidence.
The liquidator identifies overexposed accounts, initiates the liquidation process, and subsequently allocates funds to settle the liabilities of the liquidated accounts. In return, the liquidator receives funds from the collateral of the liquidated account, generating profits that are then distributed through LIQ LP staking rewards.
Fueled by the innovative prowess of Solana
Solana is a cutting-edge, permissionless blockchain that embodies the next generation of cryptocurrency technology. Leveraging the innovative Proof of History (PoH) consensus mechanism, which operates through a sequence of sequential functions, Solana boasts an impressive capacity to process over 50,000 transactions per second with near-instantaneous latency, with a theoretical maximum throughput of over 700,000 transactions per second.
The Serum Ecosystem
Serum is a decentralized exchange (DEX) and ecosystem that ushered in a new era of unprecedented speed and low transaction costs in decentralized finance. Built on Solana, this permissionless platform empowers users with unparalleled flexibility. Meanwhile, LIQ Protocol plays a pivotal role in fortifying the Serum Ecosystem, ensuring the health and stability of margin exchanges built on Serum by adeptly handling liquidation events and maintaining a delicate balance of margin accounts across diverse lending platforms.
The Liquidation Engine
The liquidator is a decentralized, permissionless program that triggers the liquidation process. It identifies overexposed accounts, prepares them for liquidation, and subsequently provides funds to settle the liabilities of the liquidated accounts. In return, the liquidator receives funds from the collateral of the liquidated account.
The LIQ Protocol boasts a multifaceted utility, encompassing:
A liquidity pool that enables users to contribute to the LIQ ecosystem, thereby earning a share of the liquidators’ profits in the form of fees, which are accrued by staking LP tokens.
By participating in the liquidation process, the LIQ Protocol concurrently furnishes liquidity to further propel the ecosystem’s growth, while concurrently establishing an “insurance fund” to safeguard the liquidation engine.
A streamlined governance framework empowers stakers to exert decision-making authority over the Liquidation Engine’s operational processes and asset holdings, encompassing the designation of markets and trading pairs for the protocol to manage.