The LQD Token

The protocol

LiquidOps is an over-collateralized lending and borrowing protocol built on Arweave and AO, which via AO processes that automatically facilitate lending and borrowing transactions.

Users can deposit various tokens into the protocol like AR, USDC, USDT and ETH. In return, they receive tokens representing their stake in the liquidity pool.

The value of these tokens increases over time as interest accrues, enabling users to earn passive income on their deposits.

The purpose and function of LQD token

LQD represents a huge transformation in LiquidOps history, turning it from a developer led platform into a community governed protocol.

It serves several critical functions within the LiquidOps ecosystem:

1. Governance token

The primary purpose of the LQD token is to enable governance over the LiquidOps protocol.

LQD enables users to participate in the decision-making process of the platform. Holders of LQD can propose changes to the protocol, such as adding new assets, adjusting interest rates, or modifying collateral factors.

2. Proposal creation and voting

Anybody with LQD can propose a governance action, these are simple or complex sets of actions, such as:

• Adding support for a new asset

• Changing an asset's collateral factor,

• Changing a market's interest rate model

• Changing any other parameter or variable of the protocol.

The governance process follows a structured approach:

• All proposals are subject to a voting period.

• Any address with voting power can cast votes for or against the proposal.

• If a majority of votes support the proposal, it is queued for implementation.

3. Vote delegation

One unique capability is that users who hold LQD have the ability to delegate their votes to someone of their choosing.

This could come in handy if LQD holders want to solicit expertise from their network. This feature ensures that even passive holders can participate in governance through trusted delegates.

4. User incentivization

LQD tokens are distributed among the various LiquidOps money markets based on the dollar value of assets lent/borrowed.

The LiquidOps token LQD, serves as both a governance mechanism and an incentive system that aligns user interests with protocol development.

By distributing decision making power to token holders, LQD ensures that LiquidOps can evolve and adapt based on community needs rather than centralised authority.

The token's dual function as both a governance tool and a reward mechanism creates a sustainable ecosystem where active participation is incentivised and protocol improvements benefit all stakeholders.