Liquity V2
Rejected venues wait the longest for re-review; a rejection has to earn another look before the scheduled date.
Liquity V2 is an immutable borrowing protocol on Ethereum where users set their own interest rate and mint BOLD against WETH, wstETH or rETH. DefiLlama recorded about $71.7M on 2026-08-14, below the published $100M materiality line. The record includes a February 2025 Stability Pool defect that prompted users to exit and a patched May 2025 immutable redeployment after an audit contest and re-audits. That response is material evidence, but size alone decides this class application today.
- TVL sustained above $100M for 30 days
The research file
Mechanism
Borrowers open overcollateralized Troves, choose an annual interest rate and mint BOLD. Lower-rate Troves are redeemed first when holders exchange BOLD for collateral at face value less fees. Stability Pools absorb liquidated debt and receive collateral plus part of borrower interest; uncovered liquidation debt can be redistributed within the collateral branch.
Control and operating record
The current deployment is immutable, so collateral branches, oracle choices and core rules cannot be upgraded by an administrator. In February 2025 Liquity confirmed a Stability Pool issue that could cause loss, advised immediate exit and replaced the initial deployment. The May redeployment followed a five-week public audit contest, re-audits and testing; Liquity said no users had been impacted by the original issue.
Exit consequences
BOLD can be sold or redeemed for a mix of WETH, wstETH and rETH, with routing based on branch debt and Stability Pool backing and a variable redemption fee. Redemption transactions can be front-run and may return less than requested if configured limits bind. Trove borrowers face liquidation and also redemption of their debt position if their chosen rate is low.
Why the class rule decides
The current aggregate remains below $100M. The incident response, immutability and redemption design deserve full underwriting once the protocol sustains material scale, but they do not waive the standing exit-capacity floor. Crossing it for 30 days reopens the file with the legacy deployment clearly separated from the current contracts.
Sources
The claims above trace to these. Where a number could not be independently verified, the thesis says so.
- Liquity V2 repository — current mechanism and trust assumptions · primary · accessed 2026-08-14
Supports: Trove mechanics, redemptions, liquidations, immutability, known risks - Liquity — V2 redeployment updates · primary · accessed 2026-08-14
Supports: February 2025 Stability Pool issue, user exit guidance, no known user impact, May 2025 redeployment - Liquity Docs — redemptions and delegation · primary · accessed 2026-08-14
Supports: BOLD redemption, redemption ordering, fees, branch routing - DefiLlama — Liquity V2 survey record · secondary · accessed 2026-08-14
Supports: survey TVL, collateral composition, Ethereum deployment
Inherited controls
The verdict above grades the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The least safe layer sets the position’s grade, and the position table names which one that is.
| Chain | Verdict | Grade | Control constraint |
|---|---|---|---|
| Ethereum | Approved | sovereign | No sequencer, no upgrade key, no operator who can be compelled — rule changes require social consensus. |