BOLD Stablecoin

by Liquity

What is BOLD?

BOLD is the stablecoin of Liquity V2, the next generation of the Liquity protocol. Unlike its predecessor LUSD, BOLD introduces user-set interest rates and multi-collateral support. BOLD can be earned through stability pool deposits, where depositors receive a share of borrower interest payments and liquidation gains. BOLD represents Liquity's evolution toward a more capital-efficient and flexible stablecoin system.

How does BOLD generate yield?

BOLD yield comes from two primary sources. First, borrowers who mint BOLD against their collateral (ETH, wstETH, etc.) pay user-set interest rates, these interest payments flow to stability pool depositors. Second, when borrower positions are liquidated, stability pool depositors receive discounted collateral in exchange for their BOLD. The combination of steady interest income and occasional liquidation gains creates the yield for BOLD depositors. This is a battle-tested mechanism inherited from Liquity V1 (which used LUSD).

Who issues BOLD?

BOLD is issued by Liquity, a decentralized borrowing protocol originally launched in 2021. Liquity V1 (with LUSD) pioneered the immutable, governance-free lending protocol model. Liquity V2 introduces improvements including user-set interest rates, multi-collateral support, and enhanced capital efficiency while maintaining the protocol's ethos of minimized governance. The protocol is backed by multiple audits and has processed billions in loans since V1's launch.

Risk profile

BOLD's risk profile combines the proven stability pool mechanism from Liquity V1 with the newer V2 architecture. The stability pool model has been battle-tested through multiple market cycles with LUSD, providing confidence in the mechanism. However, BOLD and Liquity V2 are newer, so the specific implementation has less track record. Risks include smart contract risk in the V2 contracts, collateral risk (price drops in ETH/wstETH could trigger cascading liquidations), and the possibility that interest income and liquidation gains may vary significantly over time. The protocol's governance-minimized design reduces governance attack risk but also limits the ability to adjust parameters in response to changing conditions.

Peg and redemption

BOLD maintains its peg through Liquity's redemption mechanism, anyone can redeem BOLD for the underlying collateral at face value, creating a hard price floor. This mechanism is inherited from Liquity V1 where LUSD maintained an excellent peg track record. Stability pool deposits can be withdrawn at any time with no lock-up period. BOLD liquidity is available on decentralized exchanges, with Liquity V2 launching with integrations across major DeFi protocols.

Key Risk Factors

  • Smart contract risk in Liquity V2 contracts
  • BOLD depeg risk, new stablecoin with limited track record
  • Yield from stability pool can be volatile based on liquidation activity
  • Liquity V2 is a newer protocol iteration with less battle-testing

How to Get BOLD

  • Liquity V2 interface
  • Secondary market swaps on DEXs
  • Stable Yields interface (0.1% Enso routing fee)

Details

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