Bootstrapping is the core dilemma to solve for any new DeFi protocol. An innovative system is nothing without liquidity, and projects often need to rely on unsustainable solutions to address the “cold start problem.” With Liquity V2, a new, more dynamic approach will be tested: fork-onomics.

Given the widespread popularity of the Liquity V1 codebase, teams across many DeFi ecosystems were keen to learn more about V2 and apply it to their own stablecoin solutions. This interest led to a coincidence of wants: friendly forks would build out their own stablecoins on top of the V2 codebase in exchange for a commitment to early BOLD adopters. Indeed, all friendly forks are proceeding with temporary rewards for early BOLD users as well as its liquidity providers.

For the Liquity community, this model opens up exclusive yield opportunities in each friendly forking ecosystem, which can be further magnified by LQTY stakers directing protocol-incentivized liquidity where there is demand. Moreover, the indirect benefit of becoming the dominant decentralized CDP model across the DeFi landscape is greater user trust in BOLD. 

For these teams, forkonomics means a faster go-to-market; lower marginal development costs; easier user acquisition and liquidity onboarding; and a solid foundation for further innovation. Decentralized CDP stablecoins are critical for turning native assets into dependable collateral, and this initiative is set to revitalize many DeFi ecosystems at a time when the cost of capital has gotten prohibitively expensive. 

Forkonomics flips the competitive connotation of forking on its head, instead creating an aligned initiative that makes it easier for all projects involved to get users the products they need. Plus, it’s reflective of how TradFi has developed as well: no one calls one bank a fork of another, they just benefit from the dominant business model getting standardized across the industry.

Let’s take a deeper look.
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Why the Demand for V2?
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Since announcing Liquity V2, 15 + forks have signed agreements to get a Liquity V2 software license. You may be wondering: why?

Every DeFi ecosystem is desperate to attract stablecoin liquidity, particularly for borrowing capacity against its native assets. Each additional V2 stablecoin unit thus represents one less USDC or USDT that needs to be poached from other ecosystems. And because all stablecoins based on the V2 codebase come complete with redeemability, they inherit the liquidity of their underlying tokenized collateral. In response, Liquity V2 offers a decentralized CDP stablecoin solution built specifically to create synthetic dollars for baskets of tokenized collateral, with well over [REDACTED] spent on ensuring robust smart contracts.‍

Benefits of a Shared Codebase

Beyond liquidity, the standardization of Liquity’s V2 codebase ensures that forks launch with a robust foundation of security and functionality, saving years of development effort. This sharing of the same codebase also allows for cross-pollination between forking teams, not to mention the sharing of connections with valuable auditors and integrators.

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By aligning the success of each fork in their respective chain with BOLD’s ecosystem expansion, Liquity’s model encourages collaboration rather than competition. Examples of creative innovation have included support for price feed oracle providers not utilized by BOLD, as well as concepts like minting caps. Furthermore, it gives teams the freedom to focus on the nuances of their specific chain and collateral basket.

What does this mean for V2 users?

Every new instance of V2 represents an opportunity for BOLD users to explore external ecosystems beyond (staked) ether. Users will be able to earn rewards for doing so. This activity will drive early secondary liquidity for forking projects’ stablecoins, allowing them to overcome cold start periods and begin to return protocol revenue to their own user communities. The clear flow of value throughout Liquity V2 deployments should strengthen these team’s position in their respective ecosystems and allow them to become ground zero for reference rate discovery when it comes to the collateral assets they support.

What does it mean for BOLD holders?

For BOLD holders, this means becoming highly-valued liquidity providers on 15+ chains, not only benefiting from the fees and incentives a core-pool offers, but also aligning themselves with the long-term success of a chain. They will earn rewards from each project simply for using Liquity V2, and even more if they actively provide BOLD liquidity against these other stablecoins.

What about LQTY stakers?

LQTY stakers have the power to direct 25% of V2’s revenue. With more and more forks launching and incentivizing BOLD liquidity, minting and revenue growth will follow suit. This power to direct pure stablecoin incentives across DeFi could lead to the creation of vote incentive markets as well as other benefits for voters.

Looking to the future

Forkonomics is how Liquity V2 makes decentralization sustainable and scalable, while replacing competition with collaboration. Liquity V2 offers an off-the-shelf solution for teams that makes go-to-market faster, less costly, and more useful for users across chains. Clearly differentiating target markets between chains also ensures that teams can focus on their specific chain’s needs while benefitting from a shared ecosystem.For BOLD holders, forkonomics means becoming valued liquidity providers across 15+ chains with yield opportunities, while LQTY stakers gain increasing influence through revenue direction and vote incentive markets as the ecosystem expands.The future of DeFi isn't fragmentation—it’s collaboration. And it starts with Liquity V2.