Liquity, a Decentralized Finance (DeFi) lender is prepared to undergo a “friendly fork” as part of its v2 upgrade.
Liquity v2 Set to Fix v1 Shortcomings
In a blog post, the protocol stated that it decided to go through the friendly fork after an intense reflection on the history of its v1. This review coupled with Liquity’s desire to take a more proactive approach with third-party deployment of its v2 upgrade. Ultimately, Liquity sees the possibility of having the v2 codebase as the preeminent solution for launching a collateralized onchain stablecoin.
Our vision is one in which Liquity v2 “friendly forks” propagate across every EVM-compatible blockchain, with independent teams building out a wider ecosystem with aligned interests,Liquity wrote.
Noteworthy, Liquity v2 is designed to tackle the challenges that comes with the expansion of the DeFi ecosystem. With the expansion comes a competition for mindshare in an increasingly scarce market for users, builders, and liquidity. For stablecoins, networks often have to convince both players and liquidity providers to participate in allocation.
Liquity described this move as “expensive.”
Apparently, this is where the Liquity v2 plays a crucial part: the introduction of a “sovereign” stablecoin.” This kind of digital currency is minted against a piece of native network collateral and kick-starts activity within the DeFi ecosystem, per its update.
It proved difficult to arrive at this roadmap with Liquity v1. With the latest upgrades, these challenges may be history. Liquity v2 will support multi-collateral configurations, and introduce user-set interest rates amongst other perks.
Crypto Market Sees Growing Popularity of Stablecoins
This upgrade is one of the events surrounding the growing popularity of stablecoin amongst several entities including governments.
Paxos Digital Singapore Pte. LTD., a key player in the cryptocurrency sector, recently secured approval from Singapore’s central bank to offer digital payment token services. Explicitly, this pivotal clearance allows Paxos to issue stablecoins that complies with the regulatory framework established in the region. It marks a significant expansion in the firm’s global operations.
Similarly, popular stablecoin issuer Circle also received an Electronic Money Institution (EMI) licence in line with the new Market in Crypto Asset (MiCA) regime in the European Union. This authorization makes Circle the first stablecoin company to become MiCA compliant. Consequently, stablecoins USDC and EURC are available under EU regulations.
