Positioning Liqwid for Long-Term Growth and LQ Token Appreciation

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Overview

The first section of this proposal is a detailed data analysis of LQ emissions YTD to LQ stakers, market incentives and programmatic distributions. Also included in this section is a summary of LQ buybacks completed YTD utilizing protocol revenues.

The second part of this proposal presents strategic governance measures aimed at strengthening the Liqwid DAO’s financial position, enhancing institutional confidence, and driving long-term value growth and price appreciation for LQ tokens. These proposed initiatives are subject to a successful on-chain governance vote and aim to position Liqwid as a leading decentralized credit market bridging on-chain and off-chain finance.

With major products on the horizon—including RWA direct lending, the V3 protocol deployment, BTC DeFi, and Cardano L2 rollouts of the V3 protocol—the Liqwid DAO is entering an exciting phase of accelerated innovation and ecosystem expansion. This moment presents a strong opportunity to further strengthen the DAO’s financial position as it prepares for its next stage of institutional growth.

By prioritising long-term financial sustainability, the protocol will be even better equipped to deliver these upcoming products while enhancing its attractiveness to institutional investors.

This proposal introduces a set of strategic governance measures designed to reinforce financial resilience, increase transparency, and elevate institutional readiness—while continuing to deliver industry-leading yields for lenders across Cardano DeFi.

Part 1: LQ YTD Token Emissions Data based on the effective distribution

In 2025 LQ distributions from the protocol (i.e. from the DAO treasury) includes 137,623.75 LQ in staking rewards, 109,333.06 LQ in Programmatic distribution rewards (incl. last distribution in August) and 102,595.57 LQ in Market incentives for a total of 349,552.38 LQ.

For more information, see here.

LQ YTD Token Buybacks Data Summary

2025 YTD Liqwid Buyback Program has used 511,153 ADA to buyback a total of 144,685 LQ. 404,827 ADA was used to purchase 121,095 LQ at an average buy price of $3.019. 106,326 ADA was used to purchase 23,590 LQ at an average buy price of $2.91.

Conclusion: 2025 YTD the Liqwid protocol has distributed 2.41x more in LQ emissions than LQ buybacks , without observing any meaningful decoupling from the ADA price.

LQ YTD Price Performance

Source: TradingView
Source: TradingView841×521 68.2 KB

Part 2: Strategic Governance Measures to Enhance LQ Token Value

Rational for proposed governance measures:

Institutional participants require confidence in the DAO’s financial strength, including transparent revenue allocations and a sustainable approach to LQ emissions. The following measures are designed to align Liqwid DAO with these expectations, establishing a resilient foundation for large-scale capital deployment and strategic institutional partnerships. At the same time, these measures aim to create long-term value growth for LQ holders as the protocol evolves beyond its DeFi-native origins into a broader real-world lending ecosystem.

Voting agenda:

This proposal outlines governance measures designed to reinforce the DAO’s financial position and support long-term growth. Redirecting protocol revenues from buybacks to the DAO Treasury will build a sustainable capital reserve, ensure stable funding for development, and demonstrate responsible financial management to institutional participants. These steps will also help secure the liquidity needed for continued innovation and expansion across new markets.

For LQ holders, this proposal is expected to support long-term value growth and LQ price appreciation by strengthening the protocol’s financial position and enhancing its institutional readiness. These improvements reinforce confidence in LQ and increase its attractiveness to both existing investors and new market participants. Overall, the measures immediately improve DAO revenues and establish the robust treasury foundation required for sustained growth and continued value creation.

Operating changes to implement post-vote:
  • Transparent multi-signature authorization procedure for Liqwid core team managing the treasury reserves
  • Quarterly financial statements summarizing Liqwid DAO treasury assets, liabilities and income
  • Framework for deploying treasury assets into yield-bearing strategies or swapping the tokens into stablecoins to finance protocol expansion, new product developments and salary costs.
Tokenomics changes to implement post-vote:
  • Increase Liqwid DAO’s net margin from 10% to 20%. (Note 1)
  • Reduce LQ Stakers net margin from 10% to 0%.
  • Reduce LQ staking rewards from 2.5% to 1%.
  • Discontinue market incentives (set to 0%).
  • Outstanding Programmatic rewards for each month will be equal to August 2025 distribution amount (6,379.22 LQ for the months of September-November 2025 for a total of 19,137.66 LQ)
  • Discontinue programmatic distributions immediately after this governance vote.

Note 1: Suppliers net margin of 80% remains unchanged. This means lenders will continue earning 80% of all interest accrued in the protocol.*

Conclusion

Based on these expected outcomes Liqwid core team strongly recommends the adoption of this proposal. We believe it represents a key step toward strengthening Liqwid DAO’s financial foundation, expanding its institutional reach, and delivering long-term value for protocol users and LQ holders alike.

1 Like
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I acknowledge that a higher LQ price benefits all of us. My first thought when reading this is that its primary goal is to benefit an institutional purchaser of LQ, so they lock in a floor price, without further dilution or selling. I am OK with that. However, I will only vote yes on this proposal if we (LQ stakers) who are being asked to forgo revenue streams that were committed to us are granted access to view the terms of the final deal before this goes into effect. I would have one opinion if we were slashing all these rewards and receiving a price above market for the DAO’s LQ. I would have a negative opinion on this if they are getting an extraordinary discount while LQ stakers bear the brunt of these changes to the institution’s benefit.

I understand the DAO’s benefit from a higher overall LQ price and how it supports a longer runway. However, many of us bootstrapped this protocol with the confidence that we would share in a revenue stream. I am not in favor of this going away only to grant someone with deep pockets a sweetheart deal and get below-market prices. The changes we discuss here should command a premium over any market price under consideration.

I was lukewarm on the original idea of the buyback. I am glad to see that it has no correlation to improvement, which was my original hunch. I am in favor of stopping that.

I also wonder if the NET margin for stakers should be reduced to 5% instead and no longer converted to LQ. Let the 5% accumulate to stakers in whatever currency they are earned. I was also lukewarm to the idea of converting it all to LQ for stakers, and this, in my mind, has also not had the intended effect of generating excitement about holding the LQ token. Maybe we can reduce some NET margin and go back to the beginning? Does this simplify the PD rewards computation and distribution? Would this make it less labor-intensive (net effect of reducing operating costs due to salary time spent)?

The other thing that comes to mind is RWAs. When discussing RWAs (and the BTC markets), we discussed that LQ stakers would benefit by receiving a percentage of the revenue. This now goes away. I have stated before, and continue to be concerned, with the proposals that come out one day saying one thing, only 3 months later to change. There is a high risk in this governance model continually changing things. I think we need a more predicable cadence, of changes linked to a direct startegy. It seems like we are being asked to vote with a certain set of conditions today, only to see changes made later that might have changed our original vote.

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No, because ”Reduce LQ Stakers net margin from 10% to 0%.” → No
And also because not delivering the actual PD since August but instead the same than in August. First show us what the actual PD would be by the way if you expect a vote for this. My gut feeling is that these latest month PD would be quite higher due to liquidations and repayment activity, and that you want to keep that money for funding instead of giving what is due and risking larger sell pressure. But guess what you don’t present the data about it (so if I am wrong your bad, wouldn’t even discuss it if the data you have was shared more).

Really sounds like giving $LQ to investors at better price, and less $LQ to $LQ stakers as well as no share from protocol revenue at all. 1% $LQ staking reward by itself sounds low to compensate for staking $LQ.
”These improvements reinforce confidence in LQ and increase its attractiveness to both existing investors…” => absolutely not for already invested DAO members, only confidence in LiqwidDAO treasury size, nothing about confidence in the $LQ token.

Why would not doing the 10 % programmatic distribution sustain a higher $LQ price ? You do not affirm that this portion of revenue would be converted to $LQ and kept in $LQ by the treasury (and probably not as you write ‘redirecting protocol revenue from buybacks…’, and as you probably want stronger more stable assets for the treasury) . So loosing buy pressure.

The only thing that seems to reduce sell pressure is lowering staking rewards from 2.5 to 1 % and stopping market incentives (less emissions). This is OK for me. I would vote for it by itself.
From the data you present for this period, these two actions equals to removing 185,169.82 $LQ tokens from emissions, or 52.97 % of the presented total of 349,552.38 $LQ. That’s already a good goal : get 185k of guaranteed less sell pressure, and keep the buy pressure from buybacks, which from that data is equal to 78.13% of that gone sell pressure.

Overall the proposal sounds more like less buying pressure, better price for private investors, and not much for $lq stakers, while it could just aim for the guaranteed less sell pressure from reducing emissions.

Also, why wouldn’t an investor like buybacks from revenue to sustain the price before they exit ? Especially if you anticipate more markets with more capital in them and so more revenue.
And why would you actually buy or hold $LQ for in this new state ? Just for 1% staking ? What’s the extra incentive if nothing come out of it except speculation and waiting for new investors to exit ? Because obviously they would just exit too if holding+staking offers no revenue share.

Also, everything that JakeMN wrote, especially about continuously changing previous voted mechanisms for $lq stakers, and advertised revenue share. Remember these posts pre-protocol launch about 9x revenue streams or something ^^ ?

I don’t even want to propose to reduce revenue share from 10% to 5%, because that’s the slippery slope of always accepting less. Might consider from 10 to 8, but not sure.

I do acknowledge that we better have funding to keep pushing. But this does not read like a good solution for the DAO members who are already invested, at all.

Also, about setting the conditions for ‘large-scale capital deployment’. If that is about supplying, well, blablablabla. Just take the risk like the rest of us. Nothing related to $LQ price or emissions have to deal with this, the protocol is just as much secure. And if not, if financial difficulties and close shop, well pretty sure they would get their assets back before.

So, ok for these two :

  • Reduce LQ staking rewards from 2.5% to 1%
  • Discontinue market incentives (set to 0%).

Not for the rest.

(and lol, $snek got 5 millions $ada for fucking CEX listing that really does nothing truly useful to any lambda people in the ecosystem, and you tell us the best Liqwid can do is stop any advantages of holding/staking $lq to get better funding ? sad, but at least self made ^^)

And to sum it up, this proposal turns $LQ in a pure speculative asset… Not ideal (even if maybe just temporary if PD turns back on later)

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I have a few questions before sharing my opinion.

-Considering $LQ staking is the safety module of the protocol, how would stakers benefit from staking? Because 1% staking rewards does not seem to be very attractive for the risk it carries.

-How did the first slashing of rewards (from 5% to 2.5%) change the price of the token so far? Have we seen an increase as expected from the Core Team?

What exactly does it mean for the PD to be paid as in august? Does it mean we are not getting the big PD after proposal 101?

Why not try and cut the market participation rewards BEFORE slashing rewards from the early supporters (LQ stakers)?

Do you have data to show how much of staking rewards have been sold by LQ stakers? What about the rewards from market participation?

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This is a slap in the face to token holders like myself. I bought LQ to earn revenue from the protocol.

Its more reasonable to forgo staking and revenue for a period of time, with a plan to improve it once the protocol is in a better spot.

5 Likes
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Can you elaborate more about “Framework for deploying treasury assets into yield-bearing strategies” ?

Treasury strategies will have an specific goal? Or any yield earned on the treasury will flow back to the DAO?

Also can we have more details of the order of magnitude of the investors? The amount of capital will only go to payback loans? Any amount left to be converted to treasury?

Don’t agree with not paying the last PD fully .

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Hmmmm..reducing the staking! oh well.

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Putting my emotions aside, I would like to ask some questions;

  1. How will the 20% DAO net margin income be used? Was it to fund the team’s expenditure or to utilize it for yield bearing mechanism such as providing liquidity to LQ pool, or for LQ buybacks program?
  2. Why not just eliminate LQ staking reward to 0% instead of 1%? What’s stopping you from doing so?
    I understand, maybe LQ team wants to be like a company which generates revenue but gives 0% dividend to its investors; plowing back 100% of income into the business to generate more value for the company; like a tech startup in its early days.
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While I aknowledge that there may need to accommodate some protocol incentives to align to new investors, I do believe that cutting stakers revenue stream is asking too much for those who were here from scratch. I would accept adding a vesting to staking rewards and consider them something like a yearly dividend but I will not be voting in favour of this proposal on actual terms.

decentralization of this protocol is also in stake, if this proposal goes forward say au revoir to any hope to decentralization as it will be all in LQ founders and new investors hands…

3 Likes
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For such fundamental changes in the protocol’s approach toward LQ token holders, we need far more information than what you have provided. Therefore, briefly in points:

  1. Transparency and Communication
    According to your own statements, the team is trying to improve this, so please answer the following:

    A. As a DAO member, I want to see the contract—including all terms—concluded between Liqwid Labs and the private investor(s). Since this concerns LQ tokens and the DAO treasury, every DAO member has the right to know this information. Do you plan to provide it to us in full before the actual vote?

    B. What are the PR rewards for September and October?

    C. How much undistributed funding remains from the PR rewards that you promised to distribute by the end of the year?

    D. You intended to distribute the accumulated rewards based on how long each wallet has been staking LQ. Have you managed to process this data, or have you not started at all?

    E. Do you have any metrics/data supporting your decision to reduce the margin? Can you provide them?

    F. Everything revolves around V3—please provide a clear timeline for the deployment of V3 and RWA. Clearly defined milestones leading to it. The product owner should present the assembled backlog and the sprint plan for the upcoming period.

  1. Proposal

    G. Increase Liqwid DAO’s net margin from 10% to 20%. (Note 1)
    I DO NOT AGREE – this does not make sense unless the following point is approved

    H. Reduce LQ Stakers net margin from 10% to 0%.
    I DO NOT AGREE – this would completely disconnect the LQ token from the protocol’s performance. Ensuring an increase in LQ token price through this step is not guaranteed, and you have not provided any supporting evidence for your premise.
    Instead, a reasonable alternative is to stop paying PR in LQ tokens and switch back to ADA. With the buyback being removed, this option becomes even more logical. This eliminates the selling pressure from PR distribution and, conversely, creates buying pressure from users who want to reinvest their funds back into LQ.

    I. Reduce LQ staking rewards from 2.5% to 1%.
    This can be discussed. However, even the frequently referenced AAVE has average staking rewards around 5%, although the conditions differ somewhat (token lock-up, reward voting, etc.).

    J. Discontinue market incentives (set to 0%).
    I AGREE

    K. Outstanding Programmatic rewards for each month will be equal to the August 2025 distribution amount (6,379.22 LQ for the months of September–November 2025 for a total of 19,137.66 LQ)
    I DO NOT AGREE – until you provide information about what the rewards for September and November are supposed to be, including the rewards related to point C, I cannot agree with this proposal

    L. Discontinue programmatic distributions immediately after this governance vote.
    I DO NOT AGREE – see points above

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Dear @gil and @JakeMN

The current low LQ price is largely a consequence of decisions made two years ago, when LQ stakers rejected reducing LQ inflation—a concern I raised already in 2023 multiple times (see here).

That choice created persistent selling pressure, which ultimately hindered our ability to raise capital and led to the use of debt to sustain protocol growth.

If you have a better proposal to repay the POL debt in a responsible and realistic way, please feel free to share your ideas?

This vote is not about revisiting past decisions—it is about ensuring the long-term financial health of the Liqwid protocol and restoring conditions for sustainable value growth.

Investors are ready to deploy capital, but the current level of LQ issuance must be addressed, as it remains the root cause of the problem.

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By reading some of the comments, it seems that a few people believe they are losing something—when in reality, they are benefiting significantly.

The POL debt has already been partially repaid ($3.5 millions), and for the first time we are seeing real investor interest in both Liqwid and Cardano. From a high-level, “10,000-foot investor view,” Liqwid is one of the purest ways to gain exposure to Cardano’s growth. Because of this, it is essential that the Liqwid protocol is on solid financial footing.

We are now very close to achieving this. And as mentioned before, no other lending protocol in the Cardano ecosystem comes close to Liqwid’s capabilities. But even the best technology cannot overcome ecosystem-wide limitations such as the absence of multisig wallets, limited stablecoin adoption, and other structural challenges currently slowing down Cardano DeFi as a whole.

Liqwid alone cannot solve every fundamental issue of the Cardano ecosystem—but we can ensure we are fully prepared when these gaps are addressed. The recent Intersect proposal on the “5 Pillars of Growth” aligns perfectly with what I’ve been highlighting for the past two years.

See the latest Intersect News, backed by IOG, CF and Emurgo:

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Hi Florian,
Wouldn’t it be enough to simply reduce the LQ staking rewards, set the market incentives to 0%, and pay the existing PR rewards only in CNT?
Logically, this should stop the selling pressure and instead create “hunger” for LQ tokens.

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  1. It is best practices to have some predefined rules and workflows about treasury assets.
    e.g. If the DAO treasury held ADA or stablecoins, we can supply them on Liqwid.

  2. The main goal is to achieve sustainability—that is, for the protocol to finance itself without relying on large amounts of debt.The volume of revenue is intrinsically linked to the overall size of Cardano’s DeFi ecosystem—something Liqwid itself does not control. (see the revenue model below).

    image
    image911×425 106 KB

  3. $3.5M is a strong start. As I’ve said, the better Liqwid looks financially, the easier it becomes to raise additional capital.

  4. PD would have needed a vote, as the program was closing on 31.12.2025.
    Liqwid App

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There are still open points here.

First, programmatic rewards: according to the proposal, September–November PD is fixed at the August amount and then discontinued. Without showing what PD actually would have been for those months under the existing rules, this effectively redirects undisclosed protocol revenues from PD recipients to the DAO. That’s a material change in how previously communicated revenue streams are handled, and it should be explicitly quantified and justified.

Second, I agree that very high incentives and emissions put constant sell pressure on LQ. Reducing emissions makes sense. But going all the way from a 10% net margin for stakers and ongoing PD to 0, and turning LQ into a purely speculative governance token, is in my view asking early stakers and users to fully subsidize a new investor-led phase. Vesting, cliffs, or time-limited reductions are tools that can align incentives and reduce sell pressure without eliminating the revenue share entirely.

I’m glad to see serious external investors interested in Liqwid – that’s positive and I want them in. But we cannot “sell the protocol” to new capital by socializing all upside to the DAO treasury and its future investors while removing the core value proposition that was used to bootstrap the protocol from day one. That’s not just a pricing discussion; it’s about honoring previous commitments and preserving decentralization. Concentrating all future cash flows and token-supply decisions in the DAO treasury, controlled by founders and a small set of investors, moves us further away from decentralization, not closer.

There is room for a more balanced approach: lower but non-zero staker revenue share, transparent and time-boxed PD adjustments (based on real numbers), and vesting-based incentives for both new investors and the community. That kind of compromise can strengthen the treasury, attract institutional capital, and still keep long-term community members meaningfully aligned and willing to support these changes.

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  1. Many options are indeed possible, and the approach you’re suggesting is certainly one of them. However, our immediate priority is to turn the ship around financially and eliminate the existing debt in a sustainable way without delay.

  2. In the long run, I believe the real “hunger” for LQ will come from a strong financial foundation and the broader growth of the market. As the Cardano DeFi ecosystem expands—and all indicators point toward continued growth—Liqwid will be well-positioned to benefit. Strong fundamentals, institutional readiness, and a healthier balance sheet will create genuine demand for LQ, not just short-term supply adjustments.

And I want to make it clear that I will be the first to support re-activating the program rewards for LQ stakers as soon as it becomes financially sustainable to do so.

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Just a few clarifying points:

  1. This situation was created collectively by LQ holders through on-chain governance decisions.
  2. This proposal represents my solution to address it. Over the past two years, I have not seen anyone present a realistic, actionable plan—only repeated requests for “more free rewards.”
  3. And of course, any aspect of on-chain governance can always be updated, modified, or improved through future on-chain votes.

If you have an alternative approach for how we can decentrally raise the funds needed to repay the debt while still supporting protocol growth, please share it. The entire community is ready and open to constructive ideas.

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Thanks for the clarifications Florian,

A few points from my side:

  • I agree the current situation is the result of past on-chain governance, including decisions we as LQ holders and stakers voted for.

  • I also agree that emissions need to come down and that repaying the POL debt in a realistic way is critical if we want Liqwid to keep building.

Where I disagree is with the framing that community feedback is just “requests for more free rewards”. For many of us, staking LQ and using the protocol from day one was the way Liqwid bootstrapped: we were taking price, smart contract and opportunity risk when there were no external investors and no clear funding runway. Those rewards were not “free”; they were the explicit economic deal that was presented to early users.

On top of that, there is a clear information asymmetry:

I don’t have access to investor term sheets, detailed negotiations, size/pricing/lockups of the deal, or a concrete roadmap with timelines. You and the core team see far more than we do, so from the outside it’s hard to accept that permanently cutting the staker revenue share to 0% is the only realistic option.

Since you asked for alternative, actionable ideas to repay the debt while supporting growth, here is one concrete variant that tries to move in your direction but still keep LQ aligned with protocol usage:

  1. Staking rewards (the 2.5%)

    • Reduce them aggressively (even to 0–1% as you propose). I’m fine with cutting back emissions here to reduce sell pressure.

  2. Protocol revenue share (the 10% to stakers)

    • Do not kill it permanently, but defer it and use it to repay the debt:

      • 100% of the staker revenue share is redirected to repay POL debt until the debt is fully repaid.

      • Once the debt is cleared:

        • 50% of the accrued staker share is paid out to stakers immediately, and

        • the remaining 50% vests linearly over, say, the next 12 months (or any vesting schedule the DAO agrees on).

What this achieves:

  • The DAO and investors get a strong signal: emissions are reduced, and all cash flows are focused on repairing the balance sheet in the short term.

  • Stakers clearly bear a large part of the cost (no immediate revenue, delayed upside), but they are not written out of the protocol’s economics forever.

  • LQ stays economically linked to protocol usage and revenues instead of becoming a pure governance/speculation token whose value depends mainly on new investors entering.

At the end of the day, the debt will be repaid from protocol revenues, and those revenues come from usage. If we fully disincentivize holding and staking LQ, some people may simply leave or stop using the app, and we risk undermining the very cash flows we are relying on to clean up the balance sheet. We should be fair to everyone: new investors, the team and the people who took the early risk.

One last point: saying “governance can always change it later” is not equivalent to encoding a clear, temporary plan now. Once the investor deal is completed and the protocol is on stronger footing, it will be politically much harder to restore any revenue share to stakers. If the intention is that this sacrifice is temporary, then it should be encoded as temporary in this proposal with explicit conditions and timelines (for example, the type of structure I described above).

This is my attempt to offer a realistic, actionable compromise: aggressive deleveraging now, plus a clear on-chain commitment that early users are not permanently diluted to zero in favor of new capital. If there are hard numbers showing why this structure (or a similar one) can’t work, I would genuinely like to see them.

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For example, something like the following:

  • Increase Liqwid DAO’s net margin from 10% to 15%.
    For 12 months — after that, evaluate the treasury status and either keep it, reduce it, or eventually pay out some “bonus” dividends in CNTs and let it setted on 15%.

  • Reduce LQ Stakers’ net margin from 10% to 5%.
    For 12 months based on the previous point. Pay it only in CNT.
    Declare that no matter what happens, LQ stakers will always receive this minimum 5% share of revenue in the future votes. Make this number holy and untouchable.

  • Reduce LQ staking rewards from 2.5% to 1%, eventually to 0%. Users will have to stake because of PR.

  • Discontinue market incentives (set to 0%).

  • Outstanding Programmatic rewards for each month will be equal to the August 2025 distribution amount (6,379.22 LQ for the months of September–November 2025, for a total of 19,137.66 LQ).
    → No — instead pay them in CNT, and set a vesting period throughout 2026 if the treasury does not currently hold enough CNT.

  • Discontinue programmatic distributions immediately after this governance vote.
    → No — instead pay them in CNT and set the frequency to once per quarter / once every half-year / once per year.

We can discuss this number, if 4/5/6% is adequate.

I believe in the strong long-term growth potential of the Liqwid protocol, and therefore even a 5% share should generate meaningful numbers over time. I’ve considered Liqwid to be one of my “retirement insurance” positions, and I would like to stay committed to it.

4 Likes