Is Liquity V2 Safe?
Risk Grade: B- (33/100)
Liquity V2 is rated as moderate risk — some novel mechanisms, generally well-understood.
Moderate risk — novel interest rate design creates herd behavior risks, compounded by a confirmed bug that required protocol redeployment
A stablecoin protocol where you deposit ETH as collateral and mint BOLD stablecoins, choosing your own interest rate. It holds $91M in deposits. Its C grade reflects a confirmed bug that forced $30M in withdrawals and redeployment, plus the risk that borrowers clustering at similar rates get wiped out simultaneously during redemptions.
TVL
$92M
Mechanisms
5
Interactions
3
Value Grade
D+
Key Risks for Liquity V2 Users
If most borrowers pick the same interest rate, a single redemption event can close hundreds of positions at once. You lose your collateral with no warning.
A confirmed bug in the Stability Pool forced $30M+ in outflows and required a full redeployment. The patched version is still relatively fresh.
Changing your interest rate costs an upfront fee. This means you can get stuck at a bad rate during fast market moves because adjusting is expensive.
Top Risk Factors
- •Rate herding cascade redeems large clusters simultaneously
- •Yield reflexivity loop shrinks liquidation buffer
- •Confirmed SP bug forced $30M+ outflows and redeployment
Risk Score Breakdown
Liquity V2's highest risk area is Vitality Risk (6/10). Here's how each dimension contributes to the overall 33/100 score:
Read the Full Liquity V2 Risk Report
This protocol has 2 collapse scenarios. 3 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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