After telling consumers to leave Stability Pools while an internal investigation into a possible problem was underway, Liquity v2 saw $17 million in outflows.
Liquity, a decentralized borrowing protocol based on Ethereum, saw more than $17 million in withdrawals in a single day after recommending users sell their stakes in its newly opened Liquity v2 Stability Pools.
Liquity stated on February 12 that it was looking into a “possible issue” with its v2 reward pools without providing any additional information. On January 23, Liquity v2 went live, including user-set borrowing rates.
Liquity promised users that all trade activities, such as the redemption of Bold (BOLD) tokens, the withdrawal of collateral assets, and staking services, would not be impacted while the internal study was underway:
“The protocol continues to work as expected, and to the team’s knowledge, the potential issue has not impacted any users.”
Taking preventative action to prevent financial loss
“Out of an abundance of caution,” the Liquity protocol requested that users close their positions on version 2. Investors were also advised to avoid scam efforts and to use prior frontends:
“Liquity V2 is fully permissionless, and the Liquity team does not maintain any administrative roles over the Liquity protocol. It is each user’s own responsibility to take appropriate actions when interacting with the Liquity protocol.”
Keep track of Liquity v2 Protocol outflows.
According to DefiLlama statistics, Liquity v2 experienced more than $17 million in withdrawal after the call to abandon positions.
Furthermore, Liquity v2 LQTY$1.02’s total value locked (TVL) fell 18% to $69.6 million from its peak of $84.9 million on February 11.
Despite the uncertainty, Liquity v1 did not indicate any effect on investment outflows.
Three currencies make up the Liquityv2 pool: Wrapped Ether (WETH), Rocket Pool ETH (RETH), and Wrapped Lido Staked Ether (WSTETH).
RETH and WETH generated $1.2 million and $4.5 million in outflows, respectively, while WSTETH outflows totaled over $11.3 million.
Lido, a liquid staking platform based on Ethereum, also informed WESTETH holders that they could withdraw their money from the Liquityv2 Stability Pool (“Earn”).
