Liquity Sponsors Gitcoin Grants R9 Hackathon
Kolten Bergeron
March 9, 2021
We’re excited to announce that we’re sponsoring the Gitcoin Grants Round 9 Hackathon taking place March 10 — March 31!
We expect to launch in the next few weeks and we invite hackers, builders, and creators to begin experimenting with our protocol.
What is Liquity?
Liquity is a decentralized borrowing protocol that allows you to draw interest-free loans against ETH used as collateral. It improves upon similar protocols by implementing an algorithmic monetary policy and a highly efficient liquidation mechanism, allowing for a 110% minimum collateralization ratio.
What We’re Looking For
During this hackathon we’re hoping to fund two tools that we think will be useful for the Liquity ecosystem along with an open ended bounty for hackers to explore their creativity. Each bounty will have one winner.
Bounty 1 “Redemption Arbitrage Bot”
Liquity has a redemption mechanism that allows any holder to exchange LUSD for ETH at face value, as if 1 LUSD is exactly worth $1. That is, for x LUSD you get x Dollars worth of ETH in return irrespective of the current LUSD:USD price. (See our FAQ and the Readme section for more information on redemptions, and refer to this explanation for more details on Liquity’s “hint” mechanism and its use in redemptions.)
This challenge consists of writing a bot that constantly monitors the ETH:USD Chainlink price and the LUSD:ETH rate using Uniswap v2 TWAP on Kovan (feel free to set up the trading pool yourself as part of this challenge) and automatically acts upon detected arbitrage opportunities by buying (testnet) LUSD for ETH and redeeming LUSD for more ETH than it paid for the LUSD in the first place.
🏆 Prize: 1.6 ETH (~$2,900)
Bounty 2 “Maker to Liquity Migration Tool”
Build a web-based tool that allows current MakerDAO users to seamlessly migrate their vaults to Liquity without needing to repay and reopen their positions.
For example, the migration tool could use flash loans to perform the following cycle in one transaction:
- Take out a flash loan in DAI
- Fully repay and close the user’s Maker vault
- Open a Trove on Liquity using the Ether released from the Maker vault
- Exchange the borrowed LUSD for DAI (e.g. on Uniswap)
- Use the DAI to repay the flash loan
Given that Liquity is currently only live on all test nets, the whole sequence would have to be performed on the given test net.
🏆 Prize: 1.6 ETH (~$2,900)
Bounty 3 “Open ended: Best Liquity Tool / Integration”
For this challenge, the only limitation is your imagination and the use of Liquity. We are looking for the best and most creative tool / integration that enhances the abilities of borrowers, arbitrageurs, or stakers (maybe all 3!) in the Liquity ecosystem. Your project will get bonus points if it integrates one or more protocols available on Kovan test net.
Here are some ideas for inspiration:
- Shared Trove: multiple users per single trove, with the aim of a reduced minimum net debt per user, and batched top-ups / withdrawals / adjustments to save on gas costs
- Shared Stability Pool deposit
- Proxy usage: 3rd party integrations and UX improvements, multiple Liquity operations combined into single transactions.
- Automated Trove management service, similar to DeFiSaver: a tool that automatically makes trove adjustments in order to maintain a collateral ratio within the user’s chosen target range as the ETH price varies
🏆 Prize: 1.6 ETH (~$2,900)
Get Started
If you’re ready to start building, check out the following resources:
Liquity’s most up-to-date contracts are available on Kovan test net and can be found here.
👋 If you have any questions, please join our community Discord.