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As more projects are launched on Cardano’s blockchain, the crypto market continues to take notice. Furthermore, Liqwid Finance has announced on Twitter that the launch of its mainnet will take place later this week, bolstering the development and adoption of the Cardano blockchain.
Learn about Liqwid Finance
Liqwid is a decentralized liquidity protocol that allows users to participate in the interest rate curve market as lenders, liquidity providers, or borrowers. The protocol employs a noncustodial approach and allows for the establishment of perpetual loans in an over-collateralized form. Loan protocols are critical for DeFi because they enable users to borrow money using their cryptocurrencies as collateral without requiring a centralized intermediary.
They can even obtain loans with lower interest rates and better terms than those offered by traditional banks. Furthermore, loan protocols allow users to lend their crypto to other users in exchange for interest on their positions. This is known as margin lending, and it is a popular way to generate passive income.
Liqwid is based on Cardano’s Plutus smart contract platform, which provides strong determinism and transaction security guarantees. Before its v1 release on the mainnet, the protocol’s source code was subjected to extensive security audits.
It is important to note that Liqwid is open source, allowing for simple interaction with its user interface client, contract endpoint API, or directly with Cardano blockchain smart contracts.
The importance of Liqwid for Cardano
Without a doubt, Liqwid can be another driver of Cardano’s strong performance in decentralized finance (DeFi).
As seen on the Ethereum (ETH) network, lending protocols like Aave (AAVE) and Compound (COMP) increase the total blocked value (TVL) in the altcoin, highlighting its importance in decentralizing investments, which Liqwid can also bring to the ADA blockchain.
It should be noted, however, that Liqwid may also experience some difficulties that could negatively impact Cardano.
The risks are precisely those of smart contracts, which include:
- Error in the code;
- Settlement risk;
- Regulatory issues;
- The danger of interruption.
To mitigate these risks, the Liqwid team has conducted internal audits and extensive testing of on-chain contract functions, off-chain components, and infrastructure. Many of these issues are expected to be avoided with the arrival of the lending platform in 2020.