# Liqwid Finance | 5-Month 2025 Revenue Analysis, incl. LQ Buybacks and Proposed Governance Update **URL:** \ **Category:** Uncategorized\ **Created:** [June 26, 2025, 1:59pm UTC](https://gov.liqwid.finance/t/liqwid-finance-5-month-2025-revenue-analysis-incl-lq-buybacks-and-proposed-governance-update/1863 "2025-06-26T13:59:58Z")\ **Posts on this page:** 3\ **Page:** 1
**Author:** ![FlorianVolery](https://avatars.discourse-cdn.com/v4/letter/f/f0a364/32.png) [@FlorianVolery](https://gov.liqwid.finance/u/FlorianVolery)\ **Post date:** [June 26, 2025, 1:59pm UTC](https://gov.liqwid.finance/t/liqwid-finance-5-month-2025-revenue-analysis-incl-lq-buybacks-and-proposed-governance-update/1863/1 "2025-06-26T13:59:58Z")
# **Liqwid Finance 2025 Revenue Analysis, LQ Buybacks and Proposed Governance Change** The Liqwid Labs core team has completed its initial analysis of protocol revenue and the value generated for LQ stakers over the first 5.5 months of 2025 (01.01-16.06). The Liqwid DAO has seen **strong revenue growth** during this period, with **accumulated interest trending upward significantly** in recent months. Accumulated interest represents protocol revenue, which is realized upon the repayment of outstanding loans. This upward trend reflects a healthy and growing lending activity within the protocol. One of Liqwid’s key features is the ability for lenders in each market to withdraw accrued interest (yield) at any time. This functionality enables suppliers to realize their earned interest income as frequently as they choose, without waiting for the full loan to be repaid. When lenders withdraw their accrued interest, they are effectively bringing forward the realization of yield on their deposits. **Currently, LQ stakers and the DAO treasury do not yet benefit from this functionality.** However, the Liqwid Core Team is actively working on a similar mechanism to enable **earlier access to protocol revenues** for both parties (same as the suppliers). ### **Accrued interest summary from the Liqwid platform activity:** Over the past 5.5 months, **cumulative accrued interest** within the Liqwid Protocol has increased significantly—from **$500K to $2.1M**. According to the current income distribution model, **80%** of all interest accrues to **lenders** , while the remaining **20%** is evenly split between **LQ stakers (10%)** and the **Liqwid DAO treasury (10%)**. Based on the $2.1M in accrued interest, the protocol currently holds: - **$1.7M** in interest available for withdrawal by lenders - **$400K** in interest allocated to LQ stakers and the DAO treasury _Graph: Cumulated accrued interests vs Cumulated Revenues from interests_ ![image](https://canada1.discourse-cdn.com/flex010/uploads/liqwid/original/1X/db2fdebc421d117ecdd804c253678c811801e106.png) _The Liqwid protocol currently holds **$2.1M in cumulative accrued interest** , generated from active loans. In contrast, only **$55.5K** has been realized through **loan repayments or liquidations** during the same period. This **imbalance between realized and unrealized revenue** indicates that while borrowing activity remains strong, **borrowers are not actively closing their positions**._ _We interpret this behavior as likely tied to **market expectations of a bull run**. Many users appear to be **leveraging their assets through Liqwid** and may be waiting to **sell and repay their loans when ADA reaches a higher price** , allowing them to maximize returns._ _Note: Loan origination fees are not yet included in the current “Revenues” data. The Liqwid Core Team is actively building dashboards to incorporate this data in future reporting. The current buyback analysis (see below) reflects revenues generated from interest income and loan origination fees._ ### **Comparison of LQ Buybacks (Programmatic Rewards) to LQ emissions** _Period: January 1, 2025 – May 30, 2025 (149 days)_ - **LQ Buybacks:** A total of **52,281.2 LQ** has been bought back using cumulative revenues allocated to LQ stakers. These buybacks were executed as part of the **Programmatic Rewards** system. - **Buyback Value:** The total buyback amount corresponds to **186,000 ADA** spent during this 5-month period. **Programmatic Rewards** ![image](https://canada1.discourse-cdn.com/flex010/uploads/liqwid/original/1X/8ff2c348f6ca5ef38a97b2a40c6735dd1ca15f02.png) ### **LQ Buyback vs. Emissions Summary:** - **Buyback Forecast (12-Month Projection):** If current trends continue, the protocol is on track to buy back approximately **125,300 LQ** annually. - **Staking Rewards Emissions:** \* Over the same period, **87,000 LQ** were emitted as staking rewards. When annualized, this results in a projected emission of **220,000 LQ** for the full year. ![image](https://canada1.discourse-cdn.com/flex010/uploads/liqwid/original/1X/c2c4b908e1d6dbfdb2583496e5e60f5a9d5e122c.png) 🔖 **Our forecast** , based on the last 5 months, predicts a net inflation of 141.5k LQ (\*). This figure reflects the total LQ generated through staking rewards (+220k LQ) and market incentives (+46.8k LQ), offset by the buybacks executed under the programmatic rewards program (-125.3k LQ). By reducing the staking rewards rate from 5% to 2.5%, we would see a negative net inflation of approximately +68.5k LQ for this year. #### _Visual view of the current LQ inflation coming from the Staking rewards only_ _The chart below forecasts the Staking reward LQ inflation over time (first 5 months of 2025 actual and 7 months forecasted)_ ![image](https://canada1.discourse-cdn.com/flex010/uploads/liqwid/original/1X/910904efcc29a213772ee2e837c9698b1d7fb603.png) Currently, LQ issuance from staking rewards **stands at approximately 3,800 tokens per week** (or **16.2k per month** ). This figure is **projected to increase gradually to 4,200 LQ per week** (roughly **18k per month** ) by the end of the year. The gradual rise in weekly emissions is primarily driven by the **compounding effect of restaked LQ staking rewards** , which increases the base on which new rewards are calculated. ### **Conclusion: Current Imbalance between LQ Emissions vs. Buybacks** Currently, **LQ staking rewards significantly outpace LQ buybacks** , resulting in **higher-than-necessary inflation** and sustained **monthly selling pressure** on the token. Unlike most DeFi protocols, which typically employ either buybacks or “some types of _revenues distribution to the governance token stakers”_ Liqwid uniquely implements both strategies. Each month: Protocol revenues are used to perform buybacks, which are then redistributed to LQ stakers as programmatic rewards. The Liqwid DAO treasury also contributes to buybacks using DAO-held assets. This dual mechanism provides LQ stakers with two streams of value: 1. A buyback funded by the DAO treasury 2. A programmatic reward (also a buyback) funded by protocol revenues In addition to this, the DAO continues to emit LQ staking rewards at a fixed 5% APY. However, the combination of emissions from staking rewards and redistributed LQ buybacks is currently undermining the effectiveness of the buyback program by contributing to consistent net token inflation and increased market supply. This imbalance calls for a recalibration to preserve the long-term sustainability of the protocol’s economic design. **The Liqwid Core Team recommends the Liqwid DAO to bring LQ staking yield down to a level to where this gradual acceleration of LQ emissions in the form of LQ staking rewards is not as large a percentage of total monthly buybacks value as it is today.** ---
**Author:** ![DunkyNed](https://yyz2.discourse-cdn.com/flex010/user_avatar/gov.liqwid.finance/dunkyned/32/333_2.png) [@DunkyNed](https://gov.liqwid.finance/u/DunkyNed)\ **Post date:** [June 27, 2025, 3:00pm UTC](https://gov.liqwid.finance/t/liqwid-finance-5-month-2025-revenue-analysis-incl-lq-buybacks-and-proposed-governance-update/1863/2 "2025-06-27T15:00:09Z")
Cheers for taking the time to write this up. Could you please advise why vesting seed round tokens have not been included as an LQ Emission Type above ? Surely these have contributed somehow to LQ sell pressure over the previous 5 months. These should really be included in the table and calculations above, and considered to be a decent part of the selling activity no ? How is LQ price action going to behave once vesting finishes ? ---
**Author:** ![FlorianVolery](https://avatars.discourse-cdn.com/v4/letter/f/f0a364/32.png) [@FlorianVolery](https://gov.liqwid.finance/u/FlorianVolery)\ **Post date:** [July 4, 2025, 7:23am UTC](https://gov.liqwid.finance/t/liqwid-finance-5-month-2025-revenue-analysis-incl-lq-buybacks-and-proposed-governance-update/1863/3 "2025-07-04T07:23:43Z")
The LQ emissions for the Seed Round have been ongoing over the past 24 months, with a steady monthly release of approximately 17,000 LQ. These emissions were seen as “normal” and did not result in significant market impact. Notably, they did not lead to sustained sell pressure, **as many recipients chose to hold their tokens.** Those who intended to sell had largely done so already, with much of that supply effectively bought back in September 2024. (see [here)](https://gov.liqwid.finance/t/repurposing-of-the-pol-loan-for-otc-buyback/1708) Today, the focus has shifted to staking rewards, which—according to current forecasts—are expected to surpass 17,000 LQ per month in the near future. A strong LQ price is clearly preferable to a weak one. As you rightly pointed out, the combination of reduced short-term staking rewards alongside the end of Seed Round emissions is a positive development for LQ holders, helping to reduce circulating supply pressure and supporting the long-term health of the token.