AMA Recap — Freeliquid

Section 1 : Selective Questions

Uniswap Detective :
Hello, we’re joined today by @alexbriss to discuss the Freeliquid.io platform!

Thanks for joining, we’re really loving the project so far, @crypto_mission and I have been farming ever since we first mentioned it on twitter.

Alex Briss :
Thanks, happy to be here! Yes, I was impressed by your understanding of the project from the first days.

Uniswap Detective :
First movers that solve a problem are always interesting to me so this really caught my attention and wanted to do my DD right away.

Just before we get into anything, what’s your role in the project?

Alex Briss :
Sure, I am one of the community managers at t.me/freeliquid but also have few other roles like copywriting. I have been hired as a freelancer to help the team with the articles some weeks before the launch.

But then, I got hooked on the idea of Freeliquid and joined the project on a regular basis.

Uniswap Detective :
Great. I can see why you wanted to get more involved as I also felt the same way when reading more, really interesting concept so let’s get into it!

Q1) Start off by giving us an overview of the platform and what it offers. . .

Alex Briss :
In short, we are a fork of MakerDAO with the main advantage that we take stablecoin liquidity pools (or rather the LP tokens) as collateral.

The operation is similar to MakerDAO and other decentralized lending platforms. You use your Ethereum wallet to lock collateral and receive a loan in stablecoins transferred to you. You can freely use the borrowed funds but, obviously, you have to return them to get your collateral back.

Of course there is much more to Freeliquid (like our FL reward program that is currently running) but explaining all the details would be a very long text — I guess the upcoming questions will help with that :) Also, consider reading our articles on freeliquid.medium.com for more info.

Uniswap Detective :
Great, thank you for the into!

So when users lock stable coin collateral on the platform. How much can be borrowed?

Alex Briss :
Users can borrow up to 90% in $USDFL (our stablecoin) of the initial pool value. This is significantly higher than on other platforms (which usually offer ~50% max) — that’s because we do not have the liquidation mechanism.

The stablecoin pools have almost no volatility, so everyone could be safe that USDFL is backed by enough collaterals. This was also one of the main idea behind creating Freeliquid.

Uniswap Detective :
Really great concept and 90% is extremely attractive with good reasoning. So the LP staked will remain active, and continue to generate yield from Uniswap fees?

Alex Briss :
Yes, the LP tokens are simply locked (but not sold) by the smart contracts of Freeliquid and “assigned” to your wallet. I guess you know better than me how LP tokens of, say, Uniswap work — after you get them back from Freeliquid, you just get access to your share on Uniswap again, including the fees accrued for the past period.

Uniswap Detective :
It really seems to be a very low risk and high reward way to be able to generate further utility from these LP tokens.

Who would you say your main competitors are in this space? Is there anyone that is also offering the same exchanges?

Alex Briss :
Well, of course there are giants like MakerDAO, Aave, Compound, etc.

But we really have our niche supporting stablecoin pools as collaterals. So we do not plan to compete with them — they have their own markets with collaterals like ETH or wBTC.

AFAIK there haven’t been any projects that took stablecoin pools as collateral — but new protocols are created every week :) We simply focus on our community further and try to stay competitive by adding more collateral types, getting new partnerships and making everything possible to keep the platform growing.

Uniswap Detective :
Interesting, so you really are a first mover in the space, nice!

You have done very well to build up the community so far and I think the main thing is educating when it comes to a relatively new concept, first movers in general do very well so the early believers that take their time to understand the project are usually rewarded well.

Hence doing AMAs like this are very important early on!

Alex Briss :
Thanks! Yes, we are on an uncharted territory, but it feels great to be the first (albeit we’re standing on the shoulders of the giants like MakerDAO, haha).

Q2) How about the platform, how much of it is complete?

Alex Briss :
At the moment, Freeliquid Borrow (lending) and Freeliquid Reward (FL distribution program) are fully operational. We will soon set up our voting platform and some time later the Freeliquid Save (where users can stake their USDFL and earn interest).

But we decided to offer our community to turn on features gradually, one-by-one. First, this will allow the ecosystem to progress slowly but surely (ie, no spikes in prices/liquidity, etc.) Second, there would be just too much information to learn about the platform. The Borrow and Reward modules are confusing enough for the new-comers to the platform, so they should first get used to it.

Uniswap Detective :
Perfect, so it’s fully functional already but you are just adding one step at a time.

I think that is a great way to do it as you want the community who are first to be well educated on what’s usable now and reward them with more utility as time goes on. Being able to stake that $FL will be really great but I’ll get onto that more in a minute…

Q3) Which LP pairs can currently be used as collateral?

Alex Briss :
All pairs consisting of USDT, USDC or DAI. There is also one pair of USDT and USDN, the Neutrino Protocol’s stablecoin.

Uniswap Detective :
A really great selection to start. I understand $USDN is using waves tech right?

Alright, and what’s the process to add more?

Alex Briss :
Yes, Waves and Neutrino are connected. They also have a huge USDN pool on Curve Finance (which we might add soon 👀), so that’s why we also decided to support USDN.

The support of new collaterals can be added only after successful voting. Of course, the developer team will show some initiative in looking for new opportunities, testing them, and carefully explaining the possible impact. We’ll also have a lot of discussion on the matter simply in our chat.

But the last word has to come from the community voting.

Uniswap Detective :
Great to hear that the community will have a strong say in the direction of the project but with guidance from your team of course.

Do you expect to add non-stable coins to the roster? Or even different types of alternative stable coins potentially?

Alex Briss :
Adding non-stablecoin pools is technically possible but will need some time for adjustment. It also brings some dangers like a possibility of flash-loans and, obviously, turning the liquidation mechanism on, so the $USDFL remains “solvent.”

So adding non-stablecoin pools is not what we would strive in the nearest future — but again, we can discuss it with the community.

Adding more stablecoins should not be a problem, we just need to test if LP tokens of this particular platform is fine with our smart contracts!

Uniswap Detective :
Makes sense. By alternative stable coins I mean next gen stable coins like ESD, DSD, AMPL, DEBASE and the likes. I guess this would be possible?

Alex Briss :
Hmm, I really don’t wanna go on the record promising that :) This would add another layer of complexity.

I would say, the top priority now is just adding more platforms with “classical” stablecoins. This will probably increase our TVL and liquidity by a larger factor than simply adding more types of stablecoins.

But sure, we might look into it one day.

Q4) What are the fees associated with borrowing on the platform?

Alex Briss :
First, you obviously have to pay the gas fees… Many of our transactions take a lot of data, so make sure you wait for gas prices to cool down. Unfortunately, it is simply how lending contracts work… but it should worth it in the end.

Second, there is an interest rate on the loan which you have to pay over time. It is called “Stability Fee” (same as in Maker). We turned it to zero for now — so there is no cost of borrowing.

If the community turns them on, the earnings will be spent on Freeliquid Save and other things like buyback and the burn of FL tokens via Auctions. I know it sounds confusing — but Maker has the same, you can just check their documentations about it.

The fact that we do not collect the fees does not affect the USDFL solvency in any way. It is simply backed by at least 110% of the collateral in USD pools — so no fees are needed. Another reason for zero fees is, again, that Freeliquid Save is turned off yet, so there’s nothing to spend them on :)

Uniswap Detective :
Ok, no that sounds pretty straight forward. Gas fees are to be expected, for me I just waited until periods of low gas to set up my pool and farm which I suggest others do also.

So you have set the borrowing fee to $0 right now to promote more people to use the platform. Great idea.

Then later on down the line the community can choose to add fees for this and these fees will be used to buy back $FL and burn in order to benefit $FL holders.

Is that a fair summary?

Alex Briss :
👍🏻 yep, that’s the plan, but only after we think it through and discuss with the community. Stability Fees are not crucial for the platform so far.

Q5) You mentioned governance a few times, how will governance be controlled, and who has a say in it?

And, what will be able to be voted on/changed through this?

Alex Briss :
Yes, this is a crucial part of our project — this is also why we distribute our governance token, $FL, through the Fair Launch and not just selling it via ICO or private OTC.

We will soon set up our voting platform (should be a matter of 1–2 weeks). Every FL holder is eligible to create a proposal and then vote on it (together with the rest of FL holders). One FL equals one vote. Users simply lock their FL during the vote but they are ofc returned to them after the vote is done.

There are quite few things that users can change — I already mentioned adding new collaterals or changing the Stability Fee. For the whole list please check out our white paper, there are just too many points to list them all :)

Uniswap Detective :
Great, looking forward to participating in that. As you mention the fair launch, lets touch on that.

Q6) We’re currently farming $FL on the platform right now, can you tell everyone how to start farming & what sort of yield they can expect?

Alex Briss :
Yeah maybe I should spend a bit more time writing about our FL rewards because people are especially excited about them, although it wasn’t our focus :)

These are actually our FL distribution programs — I think we never called it “farming” or “staking” anywhere. The mechanism is also different — all FL have been already minted and locked in our Reward contracts. They are then gradually distributed to users that support Freeliquid, mostly taking risks in adding liquidity on Uniswap to the native tokens, USDFL and FL.

As I said — to participate in rewards, users can, for example, add to USDFL-FL or USDFL-DAI liquidity on Uniswap and lock their tokens in Freeliquid Reward. They will then start to constantly getting FL accrued to their balance — they can simply claim them to their wallet.

If you count the USD value of your USDFL-FL liquidity (for example) and then check, how many FL you are getting — yes, you will get some huge APY like 1000–3000%. It also depends on the reward program and the amount of users, that are participating together with you.

But again — it’s not some farming just to earn tokens and dump them — although you are free to do it, of course. It is simply how we distribute our governance token by rewarding the most loyal users :)

More on our FL distribution programs: https://freeliquid.medium.com/freeliquid-rewards-distribution-a40b3de86dc

Uniswap Detective :
Ok, yes not farming exactly but a way for people to understand as it works similar but it’s more of a chance to HOLD as much more utility is coming for $FL and its very early.

I have been participating in the fair launch since day 2 and the rewards have been great + the price of $FL has been appreciating as interest grows so if does seem that people are holding these in anticipation for what’s to come.

We will also get a short article out for our community soon on exactly how to do the process but the documentation you have is quite clear already.

Q7) Finally, what does the future hold for the project?

Alex Briss :
I guess I’ve already mentioned a lot of things here, such as setting up the voting platform and providing more liquduity for USDFL and FL.

Adding support for the Curve Finance is also one of the top priorities. I guess Curve has the largest TVL in stablecoin pools (or one of the largest for sure) among all platforms. You can imagine which inflow of funds that would bring to the platform :) And Curve’s APYs are also pretty good, so our new users can make more profits as well.

There is ofc usual stuff — marketing and promoting our project, adding partnerships (only if necessary) and attracting new funds. We have a lot to offer to our community but we will do it one-by-one, so the growth is sustainable!

Uniswap Detective :
The utility of adding Curve would be huge and an obvious next step so I’m looking forward to that as I’m sure many others are.

Doing things one step at a time but perfecting each step is the way to go so I like your approach. Congrats on the successful launch so far. These pools have grown in TVL considerably over the last week.

Section 2 : Audience Questions

Miles Noma :
Hey so am I correct in assuming that with Freeliquid, you can continuously take loans out on new LP you’ve created with previous loans? Like LP/Loan stacking. IE I make a borrow 90k against a 100k pool, then 81k against my 90k, and so on and so forth?

Alex Briss :
Ha, yes, you can actually “life hack” this loop. But at some point the fees will be higher than the new loan I guess… and also you should have enough liquidity for this. But yes, this is possible.

Miles Norma :
Seeing as you are essentially printing money. If everyone did this, wouldn’t there be virtually infinite liquidity for stable coins?

Alex Briss :
There are several “restriction” mechanisms built in our economy.

The first is the fact that users can issue only 90% of USDFL but not 100% or more. So USDFL is always backed by a LARGER amount of collateral. And this is a great collateral — nothing happens to stablecoin pools, they only grow because of the fees :) This is the same as with DAI, even better in this regard.

Second, if we talk about FL — as I said, the whole supply of FL is already minted (1 Mil). Yes, currently the protocol distributes it and a lot of ppl getting it as rewards. To be honest, we did not expect that price would hold so well — we even saw a nice rise in the last days…

But anyway, in one year almost all (~95%) of FL will be distributed. And then, the supply can only be decreased because of the buy-backs/burns or simply lost tokens.

So no inflation involved both in USDFL and FL!

Mission :
Can you tell us a bit about security of the platform, and whether the team is doxxed?

I think everyone is a big traumatized with the amount of shady projects recently.

Alex Briss :
As for security — first, we are a fork of MakerDAO, and their platform has been tested for a long time. We’ve tested ours in and out before (and shortly after) the launch too.
Second, our smart contracts have been audited (and approved) — you can check the report on our website, freeliquid.io

There are some risks like collapse/damage to Uniswap (or Curve). Or that never-ending Tether story. So basically, if one of the components that Freeliquid relies will go bust, this would seriously turn up the things at Freeliquid. But this is with any other lending platform you use.

Just to finish this topic — yes, the team remains anonymous for several reasons… mostly, our own personal safety but also the safety of our project (including from regulators that will come for the DeFi space sooner or later).

The advantage of Freeliquid though that it is decentralized and governed by the community. Of course, if something happens to the developer team, it would be sad but not the end of the world :) The platform can continue to fully work.

Finally, users are getting 90% of their initial funds as a loan. So even if something happens to Freeliquid (which we hope will not), you would only lose 10%