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Liquity V1 Review 2026: 0% Interest Loans Against ETH

Liquity V1 is an immutable Ethereum borrowing protocol that lets users take 0% interest loans against ETH. It holds roughly $170M in TVL, but the project's focus has moved to V2.

Ethereum

By the DappsAtlas editorial team · Updated Nov 4, 2026

DappsAtlas score

7.4/10

Good

Visit Liquity V1

Our verdict on Liquity V1

7.4/10

Liquity V1 suits experienced DeFi users who want to borrow a stablecoin against ETH without ongoing interest and who value immutable code over flexibility. Its main strength is the simple 0% interest design with no admin keys. The main caveat is that it is the older product: Liquity's focus is V2, collateral is ETH only, there is no official frontend, and liquidation risk is real if ETH drops. Newcomers should understand CDPs before borrowing.

Score breakdown

How Liquity V1 scores

Security: 8.0/10
Ease of use: 6.5/10
Fees: 8.0/10
Features: 6.5/10

Scores run from 0 to 10 and are based only on facts we could verify. Where information was missing we mark the score n/a rather than guess.

What is Liquity V1?

Liquity V1 is a decentralized, immutable borrowing protocol on Ethereum. It lets users draw 0% interest loans against Ether as collateral, and DefiLlama lists it in the CDP category with about $169.8M in total value locked.

The protocol is operated by Liquity AG, but the company states it does not run its own frontend. Users interact through independent interfaces, and Liquity says it has not performed due diligence on them. DefiLlama lists two audits and a native token, LQTY.

Liquity's homepage now leads with V2, which adds staked ETH collateral, user-set rates and the BOLD stablecoin. V1 remains live and linked from the site. The homepage notes that staked LQTY on V2 also receives protocol revenue from V1.

How Liquity V1 works

Liquity V1 is a collateralized debt position (CDP) protocol. A user deposits ETH into a smart contract and draws a loan in the protocol's USD stablecoin, LUSD. The loan must stay over-collateralized, meaning the ETH is worth more than the debt.

DefiLlama describes the loans as 0% interest, so debt does not grow over time. Background on the design is that a stability mechanism relies on liquidations and on redemptions, where LUSD holders can exchange it for collateral. Positions that fall below the minimum ratio can be liquidated, so borrowers carry price risk.

The contracts are immutable and run on Ethereum. Users reach them through independent frontends, because Liquity does not host an interface itself. LQTY is the protocol token, and stakers receive protocol revenue.

6 features

Key features

0% interest loans

Loans against ETH carry no recurring interest rate, per the DefiLlama description. Cost comes from a one-time fee rather than a running rate.

Immutable contracts

The protocol is described as immutable, so its rules cannot be upgraded or changed by a governance vote or admin.

ETH-backed borrowing

Borrowers deposit Ether as collateral and draw the LUSD stablecoin against it, in the standard collateralized debt position model.

LQTY staking rewards

The protocol has its own token, LQTY. Staking LQTY earns a share of protocol revenue, and this stays linked to V1 through V2 staking.

Independent frontends

Liquity does not run a frontend. Several independent interfaces connect to the contracts, so users are not tied to one website.

Ethereum mainnet only

The protocol runs entirely on Ethereum mainnet, with no bridge or multi-chain deployment listed.

Pros and cons

What we like

0% interest loans against ETH with no running debt growth
Immutable contracts remove upgrade and admin-key risk
About $170M in TVL on DefiLlama shows sustained use
Two audits listed on DefiLlama
Several independent frontends, so no single website is required
Revenue from V1 flows to LQTY stakers

Watch out for

Only ETH is accepted as collateral in V1; staked ETH tokens are a V2 feature
Immutable code means bugs or design flaws cannot be patched
Liquidation and redemption risk can hit borrowers who run thin collateral buffers
No official frontend: users must pick an independent interface and do their own due diligence
Liquity's own site now promotes V2, so V1 is the older product with less development attention
Depends on an external price oracle, which the project names as its sole outside dependency (for V2, and by design similar for V1)

Liquity V1 fees

Public sources describe V1 loans as 0% interest, so there is no ongoing interest rate on the debt. Exact figures for the one-time borrowing fee, redemption fee or any frontend fee are not published.

Users would see the actual fee quoted in the independent frontend they choose before confirming a loan. Ethereum gas costs apply to every transaction and vary with network congestion. Liquity AG says it does not run its own frontend, so any frontend-level charges are set by those operators.

Is Liquity V1 safe?

DefiLlama lists two audits for Liquity V1. The contracts are described as immutable, which means no admin or governance can change them, though it also means any flaw cannot be patched. The audit reports themselves are not public, so scope and findings are not covered here.

Main risks are liquidation if ETH falls and collateral ratio drops, redemption of positions, oracle reliance and the quality of whichever frontend you use. Liquity AG explicitly says it has done no due diligence on listed frontends. No incidents are mentioned. This is not financial advice, and DeFi borrowing can lose funds.

6 steps

How to get started with Liquity V1

1
Read Liquity's documentation and the frontend disclaimer, then understand liquidation and redemption risk before committing funds.
2
Choose an independent frontend from the list on the Liquity site and check it yourself, as Liquity does not vet these operators.
3
Connect an Ethereum wallet holding ETH for collateral plus extra ETH for gas.
4
Open a loan, review the collateral ratio, borrowing fee and the amount of LUSD you will receive.
5
Keep a healthy buffer above the minimum collateral ratio and monitor the ETH price.
6
Repay your LUSD debt to get your collateral back, or look at the Stability Pool or LQTY staking if you want yield.

Open Liquity V1

Who Liquity V1 is for

Liquity V1 is for ETH holders comfortable with self-custody and DeFi risk who want a stablecoin loan without a recurring interest rate. It is less suited to beginners, to people who want staked ETH collateral or to those who prefer a single official app.

Liquity V1 FAQs

What is Liquity V1?

Liquity V1 is a decentralized, immutable borrowing protocol on Ethereum. Users lock ETH as collateral and draw loans with no ongoing interest rate, according to the DefiLlama description.

Does Liquity V1 really charge 0% interest?

V1 charges no recurring interest on loans, which is why DefiLlama describes them as 0% interest. Background on the protocol is that it uses a one-time borrowing fee instead, but the exact figure is not public supplied, so check it in a frontend before borrowing.

What is the difference between Liquity V1 and V2?

V1 is the original protocol with ETH collateral and the LUSD stablecoin. V2 adds staked ETH collateral (wstETH, rETH), user-set interest rates and the BOLD stablecoin. Liquity's homepage currently leads with V2 and links to V1 separately.

What is LQTY?

LQTY is the protocol's token, listed on DefiLlama. The homepage says staked LQTY on V2 also receives protocol revenue from Liquity V1, so V1 activity still feeds LQTY stakers.

Where do I use Liquity V1?

Liquity says it does not run its own frontend. It lists independent operators, including Liquity.App, DeFi Saver, LQTY.IO and Trove Zero, and states it has not done due diligence on them. Read that disclaimer and verify any interface yourself.

Is Liquity V1 safe?

Two audits are listed on DefiLlama, and the code is described as immutable. Immutability removes admin-key risk but also means errors cannot be fixed, and oracle, liquidation and frontend risks remain. Treat it as a smart-contract protocol with real loss risk.

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