Djed’s New Use Case Spotlight: Liqwid

Since the successful launch of Djed, the protocol has been stable and more than 31M ADA have been deposited in the reserve. Now, our main focus is to establish DJED’s adoption, and create more utility for it. In the coming weeks we will present to you different use cases for DJED and SHEN. This week we are happy to discuss the implementation of DJED on Liqwid, a decentralized lending and borrowing protocol on Cardano.

We asked Dewayne Cameron, co-founder and CEO of Liqwid Labs, several questions about the implementation, and this is what he had to say:

Please tell us a bit about Liqwid:
Liqwid is a non-custodial liquidity protocol for lending and borrowing with liquid staking on Cardano.
Liqwid Lab’s mission is to scale Cardano’s adoption as a financial operating system through modular built DAO and DeFi products. Our on-chain governance (Agora) and algorithmic money markets (Liqwid) protocols are built by Liqwid Labs and owned by the Liqwid DAO.
What does the implementation of DJED allow?
Liqwid is the first algorithmic money market on Cardano and it supports pooled lending and borrowing for Cardano native assets. Following a Liqwid community governance vote the DJED money market was launched and is now accessible via the app UI. DJED can lend, borrow and earn interest on their stablecoin holdings today at https://app.liqwid.finance. DJED suppliers and borrowers also accrue LQ rewards as part of the user distribution and will be able to easily track and claim these rewards soon.
The next Liqwid community vote to support SHEN pooled lending and borrowing on the protocol is live in the governance forum now. If this proposal passes a SHEN market will be initiated on Liqwid v1 and users will be able to lend and borrow the reserve coin from the app alongside the DJED and ADA markets.
How does it work?
Liqwid allows users to supply Cardano native assets and earn interest as well as collateralize positions and borrow assets from the protocol. When users supply assets they mint interest bearing qToken representing their deposited amount and the interest it’s accrued. As borrowers repay loans with interest the qToken to underlying asset exchange rate increases, directly accruing interest to the suppliers (qToken holders) for that market. The Liqwid ADA market also supports liquid staking meaning the ADA that’s supplied to the market but not borrowed is delegated to SPOs and earning staking rewards.
What impact do you expect DJED and SHEN will have on the platform?
We expect a lot of organic user growth from supporting the DJED stablecoin and SHEN reserve coin on the Liqwid protocol. Allowing DJED holders to tap into instant liquidity and open collateralized loans Aave style without needing to wait for borrow requests to fill in the classic peer-2-peer ETHLend style lending protocol enables more efficient capital flows and also unlocks new product opportunities. We can’t wait to build these products alongside the DJED and COTI ecosystems as we scale up support for these new markets.