Three years ago on February 2, 2023, Liqwid Labs core team launched V1 on Cardano mainnet with a clear mission: to deliver a robust, decentralized, and capital-efficient lending protocol built specifically for Cardano’s extended UTxO accounting model. What followed was not just the deployment of a new DeFi protocol, but the gradual emergence of one of the most technically advanced Plutus smart contract systems in the Cardano ecosystem.
As Liqwid reaches its third anniversary, it is worth reflecting on the milestones achieved, the value Liqwid has created for the Cardano DeFi ecosystem, and what these past three years have taught our core development team.
DeFi Infrastructure built for eUTxO
Since the outset Liqwid was designed natively for Cardano, embracing the advantages and constraints of the eUTxO model as opposed to porting over an Ethereum-based lending protocol. At the time no UTxO based pooled-lending protocol existed which inspired our core team to build a peer-to-pool lending protocol architected from the ground up to maximize on Cardano’s unique blockchain architecture.
During the design of V1 the Liqwid team worked with Duncan Coutts and his Well-Typed team of Haskell engineers to validate the architecture we created was properly optimized for Cardano’s eUTxO model and Plutus smart contract language. The entire architecting process involved a complete reimagining of transaction design patterns that power lend-borrow protocols to properly construct a secure and efficient system.
The result is an architecture that prioritizes transaction determinism, safety, and predictability. Each interaction with the protocol is explicit, verifiable, and bounded. This approach also enabled a level of robustness that is difficult to achieve in account-based systems.
A Highly Coordinated and Modular DeFi System
Liqwid stands out as one of the most technologically sophisticated DeFi protocols in the Cardano ecosystem. The protocol exists not as a single smart contract, but a coordinated system of on-chain validators, off-chain infrastructure, governance mechanisms, and risk controls.
At its core, Liqwid combines:
Non-custodial lending and borrowing smart contracts
Oracle smart contract integrated for accurate collateral pricing
Liquidation smart contract engine which triggers under strict constraints
Delegated governance through the LQ DAO Token
A modular design that supports future upgrades
Operating such a system on Cardano requires careful orchestration between on-chain validation and off-chain coordination.
Liqwid core team’s recent oracle improvements perfectly capture this on-chain validation and off-chain coordination process. The newly implemented oracle workflows operate in a cascading process highlighted in the diagram below.
Illustration
First, the ADA-USD price is fetched from multiple independent data sources. The algorithm then compares each price feed against the others. All sources must fall within a 2-3% price difference (depending on the asset) to be considered acceptable. Once price consensus is reached, a Collision Price is computed. This price is then compared against the 30-minute moving average of recent prices, and a new price is calculated using an Exponential Moving Average (EMA-30 minute algorithm).
Next, the resulting EMA Price (T1) is compared against predefined upper and lower hard caps. If necessary, the price is bounded to the floor or ceiling price to remain within these caps. The final Hard-capped price is then submitted to the blockchain by an oracle bot and becomes the reference price used to price collateral and debt assets.
The price calculation process is triggered every 2 minutes, or immediately when any data source detects a price movement greater than 2% (oracle bot and smart contract triggered). Once the updated price is published on-chain, the system begins monitoring for the next price update.
Laying the Foundations of Cardano DeFi
Since its launch, the protocol has facilitated $240 million in loan volume, establishing Liqwid as the leading lending and borrowing application on Cardano. Of the total $37M stablecoin supply on Cardano approximately $18.9M, or 50%, is supplied to Liqwid with $8.9M or 26% borrowed. (Data as of February 1, 2026, the protocol’s exact Year 3 anniversary).
Looking beyond the core protocol activity Liqwid core team has also demonstrated strong governance leadership. Utilizing the Liqwid-built open source governance framework Agora—the most widely forked governance framework in the Cardano ecosystem—the protocol has conducted over 114 governance votes. This level of participation highlights Liqwid DAO’s commitment to good governance processes and the ecosystem’s ability to evolve alongside the changing dynamics of the Cardano DeFi ecosystem.
The Liqwid protocol has successfully established itself as the leading lending protocol on Cardano. This has been achieved by the Liqwid core team remaining focused on secure innovation and creating valuable DeFi infrastructure accessible by anyone with a Cardano wallet.
Looking Ahead
As the Liqwid app enters its fourth year on mainnet, the core developers are focused on Liqwid V3 development alongside other exciting product launches. This next iteration of the protocol will deliver enhanced protocol safety, high-performance transaction speeds and superior upgradeability—while remaining true to the decentralized ethos that shaped the original Liqwid V1 design.
Three years of Liqwid represent more than a milestone. They demonstrate that building robust DeFi infrastructure on Cardano is possible, even when it requires a demanding engineering path. The journey has validated a simple but powerful idea: systems built with patience, rigor, and respect for fundamentals can endure.
As the Cardano DeFi ecosystem continues to grow, Liqwid remains committed to delivering secure, resilient, and thoughtfully designed financial infrastructure. Thank you to all Liqwid community members that have been part of the journey up to this point. Here’s to a strong future built on the solid fundamentals that defined v1 launch and to the major milestones the Liqwid ecosystem will achieve in the years ahead.
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