Off-chain systems including UI, APIs, indexers, and related services will remain fully closed-source.
Motivation
Liqwid is at a stage where increasing transparency and composability while maintaining strategic defensibility is important for long-term ecosystem growth
Key drivers include:
Transparency and trust through verifiable on-chain logic
Security through scrutiny via external review and analysis
Composability enabling easier integrations and improved liquidity flow
Ecosystem alignment with Cardano and broader DeFi principles
Strong community demand for source availability
Improved positioning for ecosystem partnerships and funding opportunities
Why BUSL 1.1
BUSL 1.1 is chosen as a controlled source-available model that balances openness and protection
Rationale:
Protection against vampire attacks in a still shallow liquidity environment
Time for network effects to strengthen protocol position before unrestricted forking
Monetization control during an early growth phase
Transparency signaling without full loss of competitive defensibility
Proven design precedent with Aave using BUSL for V3 and intended continuation in V4
Liqwid’s eUTxO-based Aave-like lending system remains technically novel and difficult to replicate
Specification
This proposal recommends:
Publishing core repositories under BUSL 1.1 with a 4-year term
oracle-onchain
liqwid-onchain
agora-pro
Scope of release:
Smart contract (Plutus validator) source code
On-chain protocol logic and interfaces
Explicit exclusions:
UI, APIs, indexers, and off-chain infrastructure remain closed-source
Timeline:
BUSL 1.1 license term set to 4 years
Latest effective milestone aligned with December 2026, subject to governance approval
Expected Impact
Improved transparency and protocol credibility
Stronger integration potential across DeFi ecosystems
Increased composability and liquidity efficiency
Better alignment with ecosystem expectations around openness
Maintained strategic defensibility during early growth phase
Risks and Considerations
Forking risk due to code visibility
Competitive replication attempts from rival protocols
Security risk from protocol internals being exposed
Opening access to smart contract code introduces a perception of increased attack surface. However, relying on closed-source systems for security is not a robust strategy. Security through obscurity tends to delay, not prevent, the discovery of vulnerabilities.
By making the code source-available, Liqwid enables broader review from independent developers and security researchers, increasing the likelihood that issues are identified and resolved earlier.
To further strengthen this approach, Liqwid will launch a self-hosted responsible disclosure and bug bounty program within a maximum of 2 months following source availability, with an initial DAO treasury-seeded reward pool of 59,000 ADA. This program will incentivize external contributors to responsibly report vulnerabilities and improve overall protocol security.
Next Steps
Gather community feedback and discussion
Conduct a temperature check vote (off-chain)
If consensus is positive, proceed to formal governance vote
If approved, prepare repositories for release under defined terms
Yes, I support releasing Liqwid smart contracts under BUSL 1.1 with a 4-year term
What does this mean? Will this license be available for a fee? If not, why not?
I think at this juncture, Liqwid should monetize the work completed to date for these products to drive revenue back towards Liqwid Labs to support V3.
I am worried about competitive replication, but will admit first mover advantage remains with Liqwid and V3 should be what keeps people using Liqwid.
What does this mean? Will this license be available for a fee? If not, why not?
This means Liqwid retains the commercial rights to the protocol, contracts, and application, while still enabling third parties to independently audit, inspect, and verify the business logic and security of the system. Unlike traditional open-source licenses, the rights granted under this model are more limited, particularly with respect to both commercial and non-commercial use.
I think at this juncture, Liqwid should monetize the work completed to date for these products to drive revenue back towards Liqwid Labs to support V3.
Agreed - this is already reflected in the current structure through interest revenue net margins and reserve income splits that generate value for the DAO.
I am worried about competitive replication, but will admit first mover advantage remains with Liqwid and V3 should be what keeps people using Liqwid.
I think the most important objective is continuing to establish Liqwid as the premier lending protocol on Cardano. Sustaining that position comes from strengthening the protocol’s moat, expanding its influence, and continuing to deliver meaningful innovation through V3 and beyond.
Kylix, thanks for the reply. Still, can’t the protocol monetize the V2 stuff at all? I think it would be a way to bring in some revenue to the DAO. And if a competitor was able to develop a protocol to rival Liqwid, at least there was some revenue brought in before that.
Kylix, thanks for the reply. Still, can’t the protocol monetize the V2 stuff at all? I think it would be a way to bring in some revenue to the DAO. And if a competitor was able to develop a protocol to rival Liqwid, at least there was some revenue brought in before that.
I think there may be some conflation here between making the code publicly viewable and monetizing the protocol itself.
Making the V2 code available under a source-available license does not mean Liqwid gives up monetization rights or opens the door for unrestricted commercial forks. Liqwid would still retain the commercial and intellectual property rights to the protocol and application. Third parties would be able to independently audit, inspect, and verify the codebase for security and transparency purposes, but they would not have the right to commercially deploy or monetize copies of Liqwid without entering into agreements with Liqwid.
The protocol already monetizes today through protocol revenue flows (interest margins, reserve income splits, etc.) that support development. Beyond that, there are additional monetization opportunities such as licensing, white-label deployments, and enterprise/direct lending integrations - similar to approaches used elsewhere in the industry. Those opportunities are not reduced simply because the code becomes visible.
Legally, someone wanting to use Liqwid commercially would still need to work with Liqwid, much like they would if the code remained private. The difference is that making the code available improves transparency, enables independent security review, strengthens trust, and can help establish Liqwid as critical infrastructure while preserving commercial rights.
So I don’t see transparency and monetization as being at odds here. The goal is to improve auditability and trust without giving away the value the DAO has built.