Liquity V2 Review 2026: Immutable Borrowing With User-Set Rates

Liquity V2 is a decentralized, immutable borrowing protocol on Ethereum. Users lock ETH, wstETH or rETH and mint BOLD, a USD-pegged stablecoin, at an interest rate they choose. It is the successor to Liquity V1 and its LUSD stablecoin.

DefiLlama lists it in the CDP category with about $93.9 million in TVL, up 0.6% over seven days, and shows it listed since January 2025. DefiLlama also records two audits and LQTY as the associated token.

Liquity AG does not run its own frontend. The homepage lists community-run interfaces (Liquity.App, DeFi Saver, LQTY.IO and Trove Zero) and states it has done no due diligence on them. The project also says V2 has no governance or admins.

Users deposit ETH, wstETH or rETH into a position and mint BOLD, a USD-pegged stablecoin. Each loan must stay over-collateralized, and the homepage advertises up to 91% LTV on ETH. If collateral value falls too far, the position can be liquidated.

Each borrower picks an interest rate. Redemptions let any BOLD holder swap BOLD for $1 worth of collateral, and positions with lower rates are the ones redeemed against first. So the rate is both a borrowing cost and a way to manage redemption risk. This also helps keep BOLD near its peg.

BOLD deposited in Stability Pools earns rewards, and LQTY stakers vote on where protocol incentives for liquidity go. The contracts are immutable, and price oracles are the only external dependency according to the project.

Liquity V2 has no fixed interest rate. Borrowers set their own rate, so the cost of a loan depends on what they choose and on market conditions. The homepage claims the best borrow rates in DeFi but public sources give no specific figures.

The project does not detail other costs such as one-time fees, liquidation penalty size, or the fees charged by community frontends. Users would see these on the chosen frontend and in the documentation, plus Ethereum gas costs for each transaction.

DefiLlama lists two audits for Liquity V2, and the contracts are described as immutable with no governance or admin keys. Immutability removes upgrade-key risk but also means any flaw cannot be patched. Collateral price oracles are the one external dependency the project names.

The main user-facing risk is frontends. Liquity AG does not operate one and says it has not vetted the community operators, so users should do their own research before connecting a wallet. Borrowers also face liquidation if collateral falls, and leverage via Multiply raises that risk. This is not financial advice.

Liquity V2 is for ETH and liquid staking holders who want to borrow stablecoins without selling their holdings, and who are comfortable managing liquidation and redemption risk. It also suits users who value immutability and minimal trust assumptions over convenience.