Activate the Liqwid Fee Switch (incomeDividend parameter) for LQ stakers

Summary: This proposal focuses on the Liqwid fee switch activation for LQ stakers to begin earning a portion of the protocol’s interest revenue.

In Liqwid money markets the interest generated (paid by the borrowers) is distributed mostly to the qToken holders (suppliers) with the remaining portion distributed based on the net margin parameters, these include: the DAO treasury, the market reserve (these tokens cannot be borrowed and can only be withdrawn) and the incomeDividend to LQ stakers.

Currently 80% of interest in each market accrues to qToken holders (suppliers) with the remaining 20% split evenly across the DAO Treasury and the market reserve.

This proposal is focused on updating the 20% split such that 10% accrues to the market reserve with the remaining 10% distributed to LQ stakers proportional to their staked amount.

The fee switch is already built into the protocol and this proposal (if successfully voted in) will require a simple parameter update for the on-chain incomeDividend parameter in each market to begin distributing interest revenue to LQ stakers. In March, just the 2nd month live on mainnet the protocol interest revenue totalled ~$60k across the ADA and DJED markets. If the LQ staking fee switch were activated LQ stakers would passively earn ~$6k. As the protocol grows in supported markets, TVL and borrow volume this 10% LQ staking interest dividend will increase in USD value.

Also important to note the fee switch % allocated to LQ stakers is configurable per market, 10% is also only a starting point we are proposing based on the current net margin parameter settings. (e.g. if the community votes to allocate more or less than 10% to a given market this can be implemented).

As part of a larger shift in LQ tokenomics that aims to drive on-chain governance participation and maximize the real yield accruing to LQ stakers in addition to the LQ staking rewards APR with Aquafarmer boost, the activation of the fee switch for LQ stakers represents a pivotal moment for the protocol as cash flow will now accrue directly to the LQ holders who stake in the Liqwid DAO protocol and participate in governance votes. The ability to passively earn real yield staking LQ is one of the core functionalities of the protocol and we are beyond thrilled to finally put this important decision to a community vote.

If successfully passed this proposed change would go into effect immediately and the core devs will make the necessary update to the DAO Treasury script to begin distributing protocol revenue to LQ stakers using the SundaeSwap rewards distribution app.

Do you support the Liqwid Fee Switch (incomeDividend parameter) activation for LQ stakers?

  • Yes
  • No

0 voters


have to say i am bullish AF :droplet:


I’m all for the fee switch, and have been waiting for it. But i have a question: if the fee switch is activated, what would prevent the Djed whale from pulling all the liquidity and sending Djed interest rates sky high? By combining the fee switch and his LQ rewards with a liquidation bot, am I wrong that the fee switch at this time gives him an extraordinary amount of power to capture liquidity in the system?


Will the protocol even allow him to withdraw that much? Once the utilization ratio goes too high doesnt it cap withdrawal?

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Borrowers constantly face the prospects of variable interest rates. A sharp increase from users pulling supplies wouldn’t liquidate positions instantly. Borrowers would still have time to address the possibility of losing positions

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If the whale removes their liquidity, then yes, interest rates goes up. Following this, the people earning more are the suppliers that stayed with their DJED in Liqwid. → they are earning, not whale.

The high interests rates can skyrocket the interests, but it does not mean that other wallets are immediately liquidated.
And if some wallets are liquidated, many people are running a liquidation bot, not only this potential whale.