Summary
This proposal aims to support functionality to enable LQ stakers and the Liqwid DAO treasury to withdraw accrued interest. As outlined in the Liqwid Finance 5-Month 2025 Revenue Analysis article the current protocol functionality enables Liqwid suppliers (lenders) to withdraw accrued interest at any time but this functionality does not extend to the LQ stakers or the Liqwid DAO treasury.
Reasoning
Providing equal functionality to Liqwid lenders, LQ stakers and the DAO treasury more strongly aligns all users and LQ stakers. The current dynamic of Liqwid markets with high utilizations has resulted in a significantly larger USD value in interest accruals compared to interest repaid. Enabling the 20% income margin split set aside for LQ stakers and the DAO treasury to withdraw accrued interest in real time balances these market dynamics with functionality lenders have had since protocol launch.
If this proposal successfully passes the accrued interest withdrawn for the LQ stakers 10% income margin allocation will be utilized for additional LQ buybacks and distributions as specified by the DAO. The accrued interest withdrawn for the Liqwid DAO treasury 10% income margin allocation will be utilized for covering Liqwid DAO Core Team salaries. Total amount of interest accrued to be withdrawn: $490,417.
To complete the withdrawal of accrued interest without added complexity or technical overhead we propose changing the Liqwid treasury/dao/reserve factors to 0/0/20% for all markets and to split the interest off-chain via the reserve. Without updating the reserve factor to accrue all protocol revenue the Liqwid DAO Core Team will be forced to manually use the dividends and treasury revenue UTxOs to top up the reserve, which adds steps and model complexity unnecessarily. The total market reserve amount to be withdrawn: $59,586.
*Note: This proposal does not include any changes to the 80% of all interest accrued to lenders nor the ability for lenders to withdraw accrued interest. This proposal is only for adding the withdrawal of accrued interest functionality to LQ stakers and the Liqwid DAO treasury.
Technical Considerations
- Adding functionality to withdraw accrued interest for LQ stakers and the DAO treasury increases the probability of a liquidity shortfall - this can be mitigated by careful management of accrued interest withdrawals.
- In the case of any bad debt events this functionality augments the negative impact of bad debt by the equivalent of the amount of interest withdrawn (0-20%) - this can be mitigated via extra repayment/compensation in case of bad debt events.
Proposal Action
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Complete monthly interest accrual withdrawals for the 20% income margin split allocated to LQ stakers (10%) and the Liqwid DAO Treasury (10%) starting with existing interest accruals allocated for the 20% income margin.
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Update the Liqwid DAO treasury reserve factor to 0/0/20% for all markets and to split the interest offchain via the reserve to simplify the workflow for Liqwid DAO Core Team.
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Begin accrued interest withdrawals with only one market at first and after 1 week move on to complete accrued interest withdrawals for all other markets.
Conclusion
This proposal aims to support the withdrawal of accrued interest feature for LQ stakers and the Liqwid DAO treasury. If this proposal successfully passes Liqwid suppliers (lenders) feature to withdraw accrued interest, available since protocol launch will become available for LQ stakers and the Liqwid DAO treasury. This feature parity balances the protocol’s current market dynamics and better aligns Liqwid lenders with LQ stakers and the DAO treasury. The Liqwid DAO Core Team supports this proposal to add the withdrawal of accrued interest functionality for LQ stakers and the Liqwid DAO Treasury.
Do you support this proposal?
- Yes
- No
