General
What is Firm Money?
Firm Money is a decentralized borrowing protocol built for the Status Network L2 chain. Users deposit ETH and Status Network core tokens as collateral and mint $USF, a USD-pegged stablecoin, at an interest rate they choose. Firm Money is a friendly fork of Liquity V2.
Using Firm Money earns Karma, the Status Network reputation and governance token.
The main use-cases for Firm Money are:
- Borrow USF against ETH, wstETH, rETH, SNT, and other Status Network native assets
- 1-click multiply exposure to collateral assets
- Earn yield by depositing USF in the stability pool or farming elsewhere
- Unlock capital productivity for Status Network native assets
To understand Firm Money it's helpful to understand Liquity
Liquity V1 was a lending protocol that allowed users to take 0% interest loans on their ETH to receive $LUSD. Over the past 4 years it proved itself resilient in a variety of market conditions.
Liquity V2 is the next iteration of borrowing, allowing users to set their own interest rate, and use more tokens as collateral.
Liquity V1 vs Liquity V2
| Similarities | Differences |
|---|---|
| Decentralized | User-set interest rates – more control over your borrowing cost. |
| Rigorous Security | Improved redemption mechanism (lowest borrowing rate is redeemed first) |
| Redemption of stablecoins for underlying collateral maintains the $1.00 peg no matter what | Troves are now transferable |
| ETH Mainnet Only | V1's code was free and open-sourced (FOSS), while with V2, Liquity will have its code set as a business source license (BUSL) |
Firm Money vs Liquity V2
| Key Differences | Description |
|---|---|
| Blockchain | Status Network L2 vs Ethereum Mainnet |
| Stablecoin | $USF vs $BOLD |
| Collateral Types | ETH, wstETH, rETH, SNT, LINEA, sGUSD vs ETH, wstETH, rETH (Liquity V2) |
| No Gas Costs | Transactions on Status Network are gasless |
| Governance | More protocol parameters are governable: fees, LTV requirements, minimum debt, minimum interest rate, ability to add/remove collateral branches |
| Security Features | Additional security features including debt limits per collateral type |
| Karma Integration | Using Firm Money earns Karma, the Status L2 reputation and governance token |
Does Firm Money have governance?
Firm Money has governance that can manage specific protocol parameters including:
- Distributing Protocol Liquidity Incentives (PIL)
- Directing protocol revenue to external initiatives
- Managing fees, LTV requirements, and minimum debt thresholds
- Updating collateral debt limits
- Adding or removing collateral branches via the Collateral Registry
Governance operates with a manual incentive direction system, replacing Liquity's original governance model.
Other Helpful Resources:
Status Network: https://status.network/
Firm Money Github: https://github.com/firm-money/firm
Nerite (protocol home): https://www.nerite.org/