I want to introduce the concept of institutional DeFi. So, for me, let's say the purpose of Cardano is to become this, um, institutional DeFi Layer One, which is decentralized, secure, and soon scalable. For us, it is obviously to onboard as much as possible onto our lending platform that we call Liquid Pro.
This Liquid Pro version will be working for regulated assets because regulation comes from the type of assets, and there we would add a kind of filtering layer of compliance where we need to identify who is accessing our platform, who can also, based on that, access which market, and also trade with which counterparties. Basically, this is our vision for Liquid Pro, and we will work on that during the year [Music] 2025. What's up, Tion?
Welcome to DAP Central, your home for everything blockchain and crypto! My name is Ford Reed. As part of today's video, we're breaking down DeFi, diving into the top app right now in Cardano when it comes to TVL, which is none other than Liquid Finance.
As part of today's interview, I'll be joined by Florian, the co-founder of this protocol. Without any further ado, let me bring you up as we get ready to dive into today's conversation. Florian, it's good to finally have you here on the channel.
Welcome! How are you? Likewise, Fed!
It's a pleasure to be here. So, yeah, let's start. No, let's jump right on in here.
We're going to be diving into Cardano and DeFi. There's been a lot of action, as you're probably well aware, right? Liquid is rising to the top, and most recently, Cardano DeFi TVL hit a new all-time high.
So I think this is perfectly timed as we get ready to sort of jump into LQ and what you guys have been building. I think it'd be good to lay the foundation with a little bit of background about who you are and exactly what you've contributed to Cardano so far. So maybe I would just say a few things about myself.
So I'm Floy, a co-founder of Liquid, based in Switzerland. Four years ago, um, Liquid happened, let's say, on Catalyst. So I published an ID, and this is where I met D.
Wayne, who is also another co-founder of Liquid. And let's say the rest is history. Fast forward, um, four years later, Liquid has now reached almost 150 million assets.
Liquid is a non-custodial lending and borrowing protocol on the Cardano blockchain. This means that users can either be suppliers, providing liquidity, or they can be borrowers. To borrow on Liquid, you need to have obviously supplied assets first, and the value of these assets is called the collateral.
This value is determined by the risk of the assets, and obviously, different thresholds are calculated for these assets. Liquid operates like a kind of money market protocol, where the interest rates are calculated by supply and demand. Actually, if you click on the market page on the top, you can access all of these markets.
Also, if you click on details, every user can access all the details. We also have the utilization. Obviously, for example, for stablecoins, there is a lot of demand, where we have interest rates above 30%, while for other assets, it's much lower.
Because of this efficient design, Liquid has attracted so much liquidity on Cardano. In addition, users can also receive staking rewards for their ADA, in addition to receiving the ADA supplier APY. Nice introduction there, Flor!
I do appreciate that. For anybody who's interested in finding out more about Liquid, I'll leave the official links to the platform down below and their official website. Now that said, there are a couple of things that we're going to be diving into.
One of them that's really got me excited is what's basically being branded as Liquid Pro, right? Or Liquid Finance Pro. I'm excited to dive into that.
But before we do, maybe we can break down some of the utility around LQ and how that particular asset fits into the ecosystem. Yes, um, before speaking about LQ, I also want to explain the cash flow because, obviously, we are a DeFi protocol, and it's important to understand how it works. So, Liquid is obviously offering loans, and every time that a borrower opens a loan, some interest is being accrued.
When this interest on a loan—sorry—is being repaid, for example, if someone borrowed $1,000 and at some point in time we have $100 of accrued interest, the person will repay $1,100. The revenue for the protocol is this accrued interest, and 80% is given back to the suppliers, 10% is kept by the Liquid DAO for further growth and development, and the last 10% is given to the LQ stakers. So, now, what is the utility of the LQ token?
The LQ token has a fixed supply of 21 million, and its utility is that, obviously, you can vote. We have also one of the first DAOs with our own on-chain system called Agora, where we vote on a lot of different things. It can go from, for example, modifications of protocol parameters to, um, I don't know, even the way we want to allocate this revenue.
So users can vote; they can also stake. When you stake, you can vote. The condition to vote is to stake.
In addition to voting, you receive a 5% APY annualized, which is called the staking reward, and you have this percentage of the protocol revenue that we are calling the programmatic. . .
Rewards. In addition to that, when borrowers open a loan, he or she is paying a loan origination fee, which is currently 1% of the borrowed amount. This revenue is split 50% between the Liquid DAO treasury and 50% for the LQ stakers as part of the programmatic rewards.
So, you did a really good job of breaking down and explaining a lot of that here. I do want to take a brief opportunity for anybody who wants to jump into governance for Liquid to go ahead and do so as well. Again, links will be left down below, but it's available at gov.
liquid. finance. Now, again, let's maybe sort of dive into what's coming next.
In terms of developments, I know you guys have recently released—when I say just, I think it's been a couple of months now—V2. You know, what else is the team currently working on, and what can we expect for you guys to push out next in terms of your core focus? So, okay, obviously, at least with Liquid, let's say.
Also, just to give you some feedback: you know, in my background, I used to build banks, and at some point I was so frustrated with the lack of vision that I decided, "Okay, one day I should build my own banks. " So the goal for me with Liquid is really to be able to bridge DeFi with tradFi and to really be part of this, I would say, fundamental revolution that will totally change the way we operate with financial products. There, I want also to present obviously my vision for it, but what the user can expect is we will reshape our front end.
It's going to be nicer and more efficient, and also we want, as part of—we call it internally like Liquid V3—but basically, it's going to be a rewrite of the smart contracts that are going to be optimized, and everything will be faster and smoother. Okay, so Florian, I want to thank you there. I think that's a really sort of solid introduction.
I'd be highly surprised if people watching this particular interview have not heard of you guys before. But now that we've got the fluff out of the way, let's dive into what comes next. Right, so as you're probably well aware, big institutions are now jumping into Bitcoin, and I think that some of that attraction and some of that liquidity will inevitably flow into assets like Cardano.
If I'm not mistaken, you've got a particular presentation that you're going to be sharing here, which will be diving into sort of how you guys plan to take advantage of that new liquidity and the new attention that will be coming here as a part of the bull run. So without any further ado, I'm going to go ahead and bring up your slides here, and at this point, I'm going to mute myself and let you handle the rest. Thank you.
So, I want to introduce the concept of institutional DeFi. As some of you may know, the current tradFi system is based on really old technology—obviously, sometimes I would say qualify that as obsolete. It's really centralized, and they have failed to really bank all these unbanked people, which are today more than one billion people.
On the other hand, you have this beautiful technology, the blockchain, with a lot of promises, a lot of features. The more I observe recently what has happened in the world, I can say today that the genie is out of the bottle; the train has left the station. All the biggest, let's say, key opinion leaders of the traditional world are now acknowledging blockchain as the upcoming, you know, big tech that will happen.
But the main question is: from this point in time today, how can we implement this at large scale? And this is where institutional DeFi comes into place. For me, it's the merge, let's say, of traditional finance with DeFi, because all these established players have a lot of knowledge, but they don't have all the know-how of the platforms that already exist.
So, institutional DeFi is a bit the marriage, the combination of this established ecosystem that can provide compliance, adherence to many different SLAs, and the know-how of DeFi players. How I see it is, obviously, this is also what Liquid is trying to do with, for example, with the gold with Apex: to work on proof of concept, to work on projects where we can leverage the best of both ecosystems. For me, institutional DeFi is using all this blockchain technology with a layer of compliance and also some compliance processes about custody of assets and tokenization.
Together, you can create this institutional DeFi that offers instant collateral mobility, 24/7 availability, obviously low cost, instant settlement, and equitable access. Where I see the role of Cardano in all of that is that, for me, I would say I'm convinced that the more institutional investors are learning about blockchain, they will understand why a financial system must be decentralized. I foresee that liquidity will converge to public blockchains over time.
For me, the purpose of Cardano is to become this institutional DeFi layer one, which is decentralized, secure, and soon scalable. In this vision, I will also present where Liquid has a role to play. We know that traditional finance is a very broad world with a lot of assets, but as you know, the World Economic Forum mentioned that everything will be tokenized in five to ten years.
Years, so it means that all of these assets at some point will come on the blockchain. For us, it is obviously to onboard as much as possible into our lending platform that we call Liquid Pro. If you think from a, let's say, operating point of view, if the token is ADA, LQ, gold, or a Tesla share (which is tokenized), or real estate, it's the same thing—it's a token that has a value from which we need to compute some interest.
This Liquid Pro version will be working for regulated assets because regulation comes from the type of assets, and there we would add a kind of filtering layer of compliance where we need to identify who is accessing our platform, who can also, based on that, access which market, and trade to which counterparties. Basically, this is our vision for Liquid Pro, and we will work on that during the year 2025. Over time, obviously, we want to list as many assets as we can, and I look forward to being there.
Florian, I got to give you guys kudos; I typically don't have people that come on here to interview that are as prepped as you are, especially with a presentation as detailed and nuanced as this. For me, I think you guys are spot on; you have done a really good job of catering to the retail community—a lot of the die-hard Cardano fans. But this is only the beginning; we're still super early, and I don't think that we've even seen the full potential of what's about to happen.
I was just looking through some of the content earlier this morning, catching up on news, and I want to say it might be Schwab or TD Ameritrade, but basically, a big financial institution is now beginning to think about how they can take their trading platform and actually have it run using a ledger or a blockchain. For me, that's sort of the very first inkling that traditional finance realizes that this technology isn't going away. The faster we can have platforms and projects like Liquid that are already developed, deployed, and have already done a lot of the heavy lifting, I think, will pull those people in and let them know, "Hey, you don't have to reinvent the wheel; you can actually trade and do all these things and be regulatory compliant by using Liquid Pro.
" I think that sets you guys up for a really big piece of the market share here as DeFi actually picks back up in Cardano. So, I just wanted to say that I think there's a lot of opportunity here. One thing that I know people will definitely be asking me is timing—so when can we expect something as big as Liquid Pro to come online?
Liquid Pro will take, I would say, you know, it's really hard in development to give you an exact timeline, but for us, we plan, let's say realistically, 12 months. Obviously, it's not just that; there will be other features that we are building, and the API needs to be optimized. We have learned a lot over these last years, and we want to improve a few things.
So altogether, let's say 12 months regarding the timeline. Because I have a lot of projects and ideas, I always look at it step by step in my head. Sometimes, as you said, we have already made so many advancements that even I sometimes cannot realize how far we have come.
Today, we have almost 150 million; tomorrow, I don't know how much we will have. Basically, Cardano and Liquid are evolving together. I know, for example, that very soon there will be Bitcoin on-chain scalability solutions, and there will also be mid-guards.
There will be other teams that are building, and Liquid will seek a win-win solution with everyone, integrating with all these other big players that are also cooking, let's say. The last two years were really hard; it was a bear market for a lot of people, but now I really have no more doubt in my mind that Cardano will be a leading blockchain and that Liquid will be part of it. I think the tough times are behind us.
So, if you’ve made it this far, moving forward, you're going to find your time here in the ecosystem much easier, especially now that you guys have been on the main net for so long. Again, I want to just thank you for the timeline there, and it's not to say that that's the end-all-be-all. I think it's just really good for at least from the viewers' perspective to sort of understand, right?
Is this something that's coming next week, next month, next year, etc. ? We definitely understand that as a builder, there are a lot of unforeseen circumstances and challenges that may pop up, and maybe even new tools that make it easier to bring Liquid Pro to the market faster.
So, it's not by any means a definitive timeline, but definitely something that I wanted to share to give the viewers a little idea of what they can expect. Now, Florian, we've talked about liquid utility and financial, excuse me, institutional adoption. One thing that we haven't discussed.
. . Though stablecoins are, and so a lot of lending and borrowing hinges on the adoption of stablecoin assets, if I'm not mistaken, Liquid is sort of aiming to be the stablecoin platform here in Cardano.
So for anybody who maybe has stablecoins or is thinking about minting stablecoin assets, what is Liquid doing to make sure that yields are attractive and that people actually want to go ahead and put their assets into the markets there? So, um, thank you, Fared. So yeah, Liquid—we call ourselves, or one of our, let's say, strategic goals is to be, or to—I think we already have the home of stablecoin on Cardano.
To do that, obviously, we have good technology, and we also have very attractive interest rates. I'm not aware of the latest rate, but for, let's say, Jed USDm, you have as a supplier, I think, around a 20% return, so it’s a lot. I really look forward also to onboarding USDA; I know they are coming really soon, and Liquid has been speaking with them, so, you know, many projects are contacting us to keep us in the loop.
Also, something that is important to say is Liquid is also sometimes talking with market makers, with people from the traditional finance sector, because what we would like to see is a big player providing liquidity on Liquid. So that’s why a regulated stablecoin is very interesting for them, because there is obviously less risk, and the more they learn about Cardano, the more they learn about Liquid, the less they feel they are taking a lot of risks by supplying assets on this platform. So this is also something we are doing.
Obviously, we are not alone, but I think step by step, the total liquidity for stablecoins on Cardano will increase. I tend to agree with you there; I think it’s inevitable. We are getting a lot of new options.
We already have quite a bit here, as you've mentioned: we've got Jed, we've got USDC coming in from one chain, I USD, USDm, USDT coming from one chain, and then D also coming from one chain there as well. Now, Florian, what I would like to do is maybe just offer you an opportunity to give us some closing thoughts as it pertains to Liquid, and then I do want to just sort of talk a little bit generally about what you see happening in the DeFi space and sort of the evolution of DeFi, right? I think we take a look at blockchains; you know, in the last bull market, Cardano only had, you know, MinSwap, SundaeSwap—very, very limited applications and use cases.
We are now seeing the launch of platforms like Liquid. You guys are now talking about Liquid Pro, you know, Liquid V3. So I want to dive into sort of where you see DeFi going, but before we do that, could we maybe just get some last thoughts or key takeaways that you want to mention as it pertains to Liquid?
Particularly, I would say that something people are not seeing when they use Liquid is all the infrastructure we have built. For us, you know, obviously the more the TVL (Total Value Locked) increases, the more we also focus on bringing, let’s say, more security for our infrastructure. Something that is really important for us is the Oracle price; I would say this is like the Achilles' heel of a lending protocol because AMMs (Automated Market Makers) are building themselves the price, and for a lending protocol, we need to take external sources for price.
So for Liquid, we are also in the process of building our own, let’s say, price aggregator to calculate this price. We have also implemented a lot of controls on them to improve our security. So I would say Liquid has made a lot of work in the backend also to be, let’s say, smoother and more scalable because, you know, 150 million for us is, let’s say, just the start.
I don't know what the next milestone is, but for sure, we are ready to grow. Yeah, I can tell you what that next milestone is: it starts with a big letter B—right, a billion! I am so excited for what you guys are building here.
Again, just taking a look at the TVL and seeing how quickly and sharply that has risen is really a testament to what you guys have built and the trust you have gained here from the community. All right, now that we’ve got that out of the way, I'm really interested to hear about this piece here because, again, you live and breathe DeFi. Where do you see this current ecosystem or this sort of niche within blockchain and crypto going over the course of the next coming years?
I think when we talk about DeFi, there will be two types: let’s say the DeFi for retail, which is for unregulated assets, and DeFi for regulated assets. As I have explained before, the traditional finance system has a lot of weaknesses, and people understand that. Everywhere, they are looking for solutions.
You know, when I quote some article from Forbes, Bloomberg, or the World Economic Forum, they are really looking actively. But what I see is they are still trapped in their own mindset; usually, it is still led, you know, by, I would say, 50-year-olds plus, people that were not born with the internet. So, for them, it’s.
. . Really hard to understand digitalization and also to be able to shape a vision for what is the future of banking.
I really believe that at some point they will contact or try to merge or integrate it with this DeFi protocol to build institutional DeFi. This is where I’m the most excited because, you know, this is my background. I used to build banks, and, um, at some point, I decided, “Okay, I think I can do it,” and, uh, I’m here.
So, for me, I can finally implement all my ideas, all my vision. It took me four years to get here, and, uh, that’s what excites me the most. I believe that we’re still at a very, very early stage.
Again, I think there’s a lot of potential in what you guys have already built and what’s going to be coming in terms of needs from those institutional players here. So, that said, Floran, unless there’s anything else that you would like to discuss, go ahead. I’d like to give you the opportunity.
Another thing that is really important is if you look at this blockchain world and you want to create a financial system, basically there are a few building blocks you need: you need to have a wallet, you need to have a DEX, you need to have someone performing some compliance task, you need to have some liquidity, and you need to have a place of exchange. Once you have these things combined together, you can replicate any product on the blockchain. Another thing that I’m doing is, you know, I’m also talking with a lot of different founders, a lot of different projects, in order to build or, let’s say, to combine all these building blocks because, you know, there are a lot of good founders everywhere on Cardano, but sometimes the ecosystem is really fragmented.
What I also try to do is to, you know, connect people with each other, try to work, and try to find the synergies because only together, as an ecosystem, can we build this new financial system on the blockchain. Yeah, I think that’s one thing that we've really needed here in the Cardano ecosystem: one tool or one app that has everything sort of integrated together. So, as you mentioned, a wallet, the ability to swap, the ability to lend and borrow, and do all these things without necessarily having to jump from product to product because there’s no continuity in the space.
You know, we have a lot of teams that are just building a wallet, teams that are just building a DEX platform, teams that are just building a swapping platform. But if we can get somebody that can do all of that and make that seem seamless, I think there’s going to be a lot of value in that. For a user, it’s also going to make their lives so much easier because they don’t have to worry about trying to figure out what’s the best wallet, what’s the best lending platform, what’s the best DEX, blah, blah, blah, blah, blah.
So those are, I think, some really, really interesting points. I’m not sure if that was sort of like a tease or if you were alluding that, you know, the LQ team would be looking to build something like that. But definitely, I think it’s a really good point that you’ve made there.
Yeah, so, um, I’m involved in also different projects, you know? I advise a lot of people; a lot of people, you know, ask my opinion on a few things. So, yes, I’m involved in many different projects, and, um, I can tell you that, you know, the amount of, let’s say, growth that I have witnessed from my side is really big.
You know, what I also want to say is these two years were really brutal. So a lot of, I think, the companies that stayed, they are the best because obviously, from one hand, you needed this kind of big cleaning up because, yeah, there were a lot of bad products. I’m speaking in general, and the ones that have survived these last two years are really the best.
The future is looking really bright for Cardano. Yeah, it’s really amazing how nature is self-healing, right? Because we have a very similar process with wildfires, where people might see, you know, a wildfire happening and a forest gets burnt down.
Initially, you know, you’re like, “Man, what’s going on? ” I feel like that’s the bear market wildfire: a lot of projects getting burnt down. But what happens after the fact is you actually begin to see seedlings grow, right?
Then there’s availability for new life to come about. I think that Liquid has taken advantage of that, right? You guys have made it through that wildfire, and you guys have literally sprung from the ashes and are now the leading DeFi platform here within Cardano.
So, as we get ready to close out here, Floran, for anybody who wants to join the LQ community, how can they do that? Do you guys have a Discord, Telegram? You know, how can they get in touch with you or just get involved with governance?
Yes, so, yes, we have a Discord; we will also add the link in the description. We have our on-chain governance, which is on our app, and before we vote on-chain, we have a kind of off-chain discussion based on the governance forum that you showed before. I would say Discord is the best place to start, to get engaged with the community.
It’s one of the oldest on Cardano, with a lot of knowledgeable DeFi people. We are welcoming everyone! Perfect, awesome interview and awesome introduction to Florian, the co-founder here of the Liquid platform, who is building on Cardano.
Again, if you guys have any questions about the platform, how to access it, or links to everything that we discussed, they will be left down below. This is, I believe, just the first of many interviews that I plan to have here with the LQT moving forward. I just want to give a quick shout-out to RNG Crypto as well, who is a viewer here and is actually the one that pushed us to make this happen.
So, RNG, I want to thank you for that; I definitely do appreciate it! Of course, Florian, thank you for your time here as well. Ladies and gentlemen, that’ll do it here for today’s interview, breaking down everything going on in Cardano.
If you found any portion of today’s call to be helpful or informational, please make sure to smash that thumbs up. If it’s your first time stopping by DAP Central and you want more content like this, breaking down all of the biggest builders here within Cardano, consider subscribing to the channel. And last but not least, if you have any questions as it pertains to Liquid, their markets, or even some of the teasers that Florian has provided here regarding institutional adoption or Liquid Pro, please leave a comment down below.
I’ll make sure to get those over to the team, or alternatively, join their Discord, and you can actually speak to the team members yourselves. That said, that will do it here for today’s video. Wishing you all a wonderful rest of your day.
Take care for now, everybody! See you later. Bye-bye!
