Introduction to Fluity Finance
Fluity Protocol is a friendly fork of Liquity Protocol on Binance Smart Chain. Fluity is committed to Liquity’s vision of providing a decentralized borrowing protocol with interest-free loans, high capital efficiency, and censorship-resistant stablecoins. This type of friendly cooperation is similar to that of Ellipse and Curve.
To show our appreciation for the Liquity community, LQTY holders and stakers will receive 25% of the Fluity token (FLTY) supply weekly over 2 years.
Liquity offers the best borrowing conditions on the market with the main benefits being:
- 0% interest rate
- A collateral ratio of just 110%
- Governance free — all operations are algorithmic and fully automated
- Directly redeemable — LUSD can be redeemed at face value for the underlying collateral, always and at any time
- Censorship resistant — the protocol is controlled by nobody
Fluity has the same functionalities as Liquity (opening troves to borrow FLUSD, redemption, stability pool, staking, etc.) except that FLTY rewards from stability pool and liquidity pool will be sent to a vesting contract instead of directly back to users. Users can still withdraw those rewards before fully vested but may face a penalty for doing so.
The initial kind of collateral Fluity supports is BNB. In the future, we may support other assets as well.
Users can stake FLTY to earn platform fees (borrowing fees and redemption fees) from Fluity Protocol.
There will be 100 million (100,000,000) FLTY tokens in total.
- 35% for stability pool rewards: Continuously issued to users who deposit FLUSD to the Stability Pool following a yearly halving schedule, described by the following function: 35,000,000 * (1–0.5^year)
- 20% liquidity provider rewards: Continuously minted for 1 year to liquidity providers of PancakeSwap FLTY-BNB trading pair (10%) and future stable coin pool (10%)
- 25% airdrop to LQTY holders: As agreed with Liquity team, we will airdrop FLTY to LQTY holders and stakers. Those tokens will be distributed weekly for 2 years
- 15% team/development fund: Lock-up for 1 year, then continuously vested for the second year
- 5% initial liquidity/marketing/bounties: Set aside for providing initial liquidity and other marketing/promotion needs
FLUSD Stable Coin
FLUSD is minted when users deposit collateral (BNB, and more in the future) and open troves. The mechanism for its price stability is described in Liquity’s doc.
Stability Pool Rewards
Users can deposit FLUSD to Stability Pool to get both BNB gains (through liquidations of risky troves) and FLTY rewards as incentives for being early adopters.
BNB gains can be transferred either directly to users or to users’ troves, while FLTY rewards will be transferred to a vesting contract, where users can either wait for 3 months to fully vest and then withdraw, or withdraw immediately with a 50% penalty (the penalty will be burnt).
Liquidity Provider Rewards
There will be 2 kinds of liquidity provider rewards: one is for BNB/FLTY PancakeSwap trading pair, another is for future stable coin pool (e.g., curve-like pool such as Ellipsis) with FLUSD.
At the initial stage, users can deposit BNB/FLTY PancakeSwap liquidity pool tokens to receive FLTY rewards, which will be continuously issued for 1 year.
Later, once a stable coin pool including FLUSD is set up, liquidity providers of this pool will also be incentivized with FLTY rewards.
Same as Stability Pool, those FLTY rewards from providing liquidity will also be transferred to a vesting contract of 3 month vesting period.
Each of the liquidity provider rewards comprises half of the 20% token supply in total, i.e. 10% for each pool.
BNB/FLTY PancakeSwap trading pair rewards will be live immediately after core contracts are deployed and transfer unlocked, on the other hand, stable coin pool liquidity provider rewards will be available in the near future.
Users can stake FLTY to earn a pro-rata share of the borrowing and redemption fees in FLUSD and BNB. For more details, check Liquity’s explanation on LQTY staking.
Airdrop to LQTY Holders
FLTY will be distributed to LQTY holders and stakers through airdrops for 2 years.
25% of the FLTY total supply is allocated for the airdrop. Every week, a snapshot of LQTY balances (including those that are staking) will be taken to generate a Merkle root for FLTY distribution, which will run 104 times in total. To properly decentralize the airdrop review process, a 3-of-5 multisig account will review and approve the airdrop distribution, which comprises 2 members of Fluity team, 2 representatives of the Liquity community, and 1 independent co-signer with good reputation and credibility in the DeFi industry. The signers will be incentivized by 1% of the airdrop tokens to make the process as autonomous as possible.
The airdrop will be set up later once the protocol is live. LQTY holders and stakers will get retroactively airdropped when it’s ready.
FLTY will launch in early May 2021. Please follow our Twitter and Telegram to know when the launch goes live.