What is Liquid?
Liqui, found online at Liqui.io, is a cryptocurrency exchange with particularly strong liquidity in Ethereum and other altcoins – including MGO, BAT, VSL, and ROUND.
At the time of writing, Liqui was sitting at the 28th spot in terms of 24 hour trading volume, with about $10,000,000 of trading volume over a 24 hour period. That puts in between exchanges like CEX.io, Gatehub, OkCoin, and Gatecoin in terms of trading volume.
What makes Liqui different from the dozens of other exchanges? One of the advantages is that Liqui has a savings account where you can earn a 24% annual percent rate (APR). Interest is paid every 24 hours, and you can withdraw your funds at any time.
Obviously, there’s a catch to this 24% APR: you can only deposit a certain amount of money into the Liqui savings account. Your allowable amount is based on your Liqui trading volume. At the time of writing, Liqui had a limit of 300 BTC.
Liqui is clearly a unique concept compared to other cryptocurrency exchanges. Let’s take a closer look at how it all works.
Liqui Savings Account Features
For most people, a guaranteed 24% annual return on investment is a very good thing. How does Liqui offer a 24% APR?
As mentioned above, there’s a limit to how much you can deposit into your Liqui savings account. We’ll talk about that limit below. But first, here are some of the features of the savings account:
- Actual interest fees are calculated by the minute for currencies like BTC, LTC, and ETH
- Your interest is paid every 24 hours
- Your savings account funds are never blocked; you can withdraw them at any time or cancel your deposit and make them immediately available for trading
How Does the Savings Account Limit Work?
If Liqui offered unlimited 24% APR to all investors at all amounts, they would be the most popular investing website on the planet. That’s why they need a limit in place. Liqui has a limit to guarantee they can keep paying their 24% APR.
Here’s how that limit works: the limit is based on two indicators, including your trade volume and the percentage rebate from each transaction.
The trading fee is 0.5% (0.25% each from the maker/taker). Liqui rebates 75% of each trade towards interest payments. 0.5% x 0.75 = 0.375%.
Therefore, a daily exchange volume of 45 BTC allows Liqui to fully cover interest expenses equivalent to 250 BTC at 24% APR (0.162 BTC per day). That’s because 45 BTC x 0.375% (the amount paid to you in interest) = 0.168 BTC.
Your interest is paid in whatever coin you deposited.
Now, you’re probably wondering about one big thing: the prices of cryptocurrencies aren’t fixed. They fluctuate wildly. How can Liqui guarantee a 24% return when coins can drop 24% in value in a single day?
Liqui has a system in place to protect against this. The exchange allocates 20% for fluctuations like this to avoid total limit excess. However, if the price of a coin sharply rises, the limit for that coin proportionally to its price will decrease. On the contrary, if the price sharply decreases, Liqui increases the limit for the coin proportionally to the price decrease.
Basically, if the value of a cryptocurrency sharply rises, then the company reduces its allowable limit in order to ensure it continues paying a 24% APR. If the value of a cryptocurrency sharply drops, Liqui will increase the allowable limit in your savings account.
Liqui’s limit was originally 200 BTC. Users could guarantee a 24% APR on a 365 day period for up to 200 BTC when the exchange first launched.
As of June 2017, that limit had been increased to 300 BTC. Eventually, the exchange wants to increase the limit to 1000 BTC.
That limit, by the way, extends across all currencies. The value of whatever currency you’re using is stated in BTC.
Liqui has a basic fee structure:
Liqui initially had a trading fee of 0.5%, with 0.25% coming from each party. They’ve since adjusted their fees. Here are the fees for BTC, ETH, and USD:
- Maker Fee: 0.1%
- Taker Fee: 0.25%
There are no limits for deposits or withdrawals.
Liqui is headquartered in Kiev, Ukraine. The company also has remote employees in Russia, Armenia, and the United States. The entire project is run by 7 individuals (or at least, it was run by 7 individuals at the time of launch in July 2016).