Mitrade Insights is dedicated to providing investors with rich, timely and most valuable financial information to help investors grasp the market situation and find timely trading opportunities.

2021

Best News & Analysis Provider

FxDailyInfo

2022

Best Forex Educational Resources Global

International Business Magazine

Insights

News

Cryptocurrencies

Liquity Protocol investigates potential issues with its V2 stability pools, urges users to close positions

Source Cryptopolitan

Liquity Protocol, a borrowing hub on Ethereum (ETH), reported a potential problem with its V2 vaults. The protocol called for all users to close their positions as a precaution.

Liquity Protocol reported a potential issue with its V2 vaults, urging all users to close their positions for additional security as the team investigates the problem. Users were urged to disconnect their wallets, close their lending positions, and avoid interacting with unknown intermediaries or front ends claiming to connect to the protocol.

The attack may have also affected Lido users, who may also deposit their tokens into Liquity vaults. Potentially, RocketPool users may also be affected, as Liquity allows the usage of liquid staking ETH as collaterals in its pools.

⚠️ Notice to wstETH Users:

It is recommended to promptly withdraw tokens from Liquity V2 Stability Pool (“Earn”) as a potential issue is being investigated by their team.

For updates, refer to official Liquity channels. https://t.co/2ag6TcwK1q

— Lido (@LidoFinance) February 12, 2025

Rocketpool has not warned its users, though the warning may also apply to rETH holders. Nerite is also one of the partner protocols, as Liquity allows for multi-collateral deposits. The Nerite project is a fork of Liquity V2 on Arbitrum, suggesting the problem is fundamental to the smart contracts and is repeated on all chains.

There are no confirmed reports of missing coins and tokens, or drained vaults. LQTY tokens remain available in the vaults, and users can withdraw their collateral. The BOLD stablecoin remains fully backed and liquid. Liquity is fully permissionless, with no lockup periods, and end users can always withdraw their collateral. BOLD tokens can also never be frozen or blacklisted. While convenient for some users, those features also allow hackers and exploiters to move away with funds.

Lending protocols remained one of the DeFi staples, a tool to tap the value of other tokens while using available stablecoin liquidity. Pools are also often the target of attacks, aiming for low-security points in smart contracts or vulnerable wallets.

Liquidity V2 is a permissionless lending vault, where the team does not perform additional actions to release the funds. Both Lido and Liquity warned against scams and messages disguised as helping users retrieve their funds.

The Liquity V2 is a relatively new vault on the Ethereum network, launched on January 23. The vault partnered with Nexus Mutual for protection against hacks, oracle attacks, and other exploits, though the protocol still encountered a problem.

Liquity is among the relatively large lending protocols, with significant WETH, wstETH, and rETH positions. The protocol reported $384.38M in value locked, with $80.71M locked in the new V2 vaults.

The V2 lending pool allowed users to set up lending pools against their WETH, wstETH, and rETH reserves. Depositors of those tokens can mint BOLD at their preferred interest rate. Additionally, those that deposited BOLD for additional liquidity, could earn a passive income. For now, none of the collateral or loan assets are affected, but the protocol may be exposed to a potential attack.

Liquity assets have spread to other DeFi projects, DEX, and other platforms, becoming a source of additional liquidity for trading or tapping other protocols for passive income.

Liquity aimed to recover its growth in 2025

Liquity is one of the older DeFi lending protocols, ranked 44th based on its value locked. The protocol aims to grow its revenues while offering 2,79% APR for staking LQTY tokens.

The Liquity vault is relatively niche, with around 13,878 holders of LQTY, and 8,322 holders of the LUSD stablecoin. Locking LUSD in the stability pool has an annualized yield of 6.44%.

Liquity peaked in 2021 during the first DeFi boom, with over $4.4B in value locked. The 2022 market crash deeply affected the protocol, leaving it to work with a fraction of that liquidity. Currently, the lending vaults are over-collateralized, with a 527.7% total collateral ratio.

Following the news, LQTY traded at $1.06, with a minimal drawdown. The token has been drifting sideways at a fully diluted valuation of $106M. The protocol is valued even lower than newly launched meme tokens, despite being a producer of passive income and a liquidity hub.

Liquity Protocol is also a fee producer, depending on market conditions. Fees from the protocol reached over $165K during the market peak in November, falling to around $69K in January, based on Token Terminal data.

Cryptopolitan Academy: How to Write a Web3 Resume That Lands Interviews - FREE Cheat Sheet

Disclaimer: For information purposes only. Past performance is not indicative of future results.

Recommended Articles

Gold Price Forecast: XAU/USD drifts higher above $4,200 as Fed delivers expected cut Gold price (XAU/USD) gains momentum to around $4,235 during the early Asian session on Thursday. The precious metal extends its upside after the US Federal Reserve (Fed) delivered an expected third consecutive interest rate cut and maintained its outlook for just one cut in 2026.

Author FXStreet

Dec 11, Thu

Gold price (XAU/USD) gains momentum to around $4,235 during the early Asian session on Thursday. The precious metal extends its upside after the US Federal Reserve (Fed) delivered an expected third consecutive interest rate cut and maintained its outlook for just one cut in 2026.

Ethereum Price Slips Lower — $3,000 Looms as the Key Battleground Ethereum is attempting to recover from a $3,026 low but remains below $3,200 and the 100-hour SMA, with a bearish trend line near $3,175 capping rebounds as bulls need a clean break above $3,200 to target $3,250–$3,400, while a drop below $3,050 risks a retest of $3,000 and $2,940.

Author Mitrade

Dec 15, Mon

Ethereum is attempting to recover from a $3,026 low but remains below $3,200 and the 100-hour SMA, with a bearish trend line near $3,175 capping rebounds as bulls need a clean break above $3,200 to target $3,250–$3,400, while a drop below $3,050 risks a retest of $3,000 and $2,940.

Macro Analysts: Hawkish Japan Could Push Bitcoin Below $70K Analysts predict Bitcoin may face further declines towards the $70,000 mark if the Bank of Japan raises interest rates as expected.

Author Mitrade

Dec 15, Mon

Analysts predict Bitcoin may face further declines towards the $70,000 mark if the Bank of Japan raises interest rates as expected.

Bitcoin Slides 5% as Sellers Lean In — Can BTC Reclaim $88,000?Bitcoin has dropped back below $88,000 after rolling over from $90,500, with price still trading under the 100-hour Simple Moving Average. The sell-off found a floor at $85,151, and BTC is now consolidating near that base, but rebounds are facing pressure from a bearish trend line around $89,000. Bulls need to retake $88,000–$89,000 to ease downside risk; failure to do so keeps $85,500–$85,000 and then $83,500 in play, with $80,000 as the deeper “line in the sand.” Bitcoin (BTC) is back in damage-control mode after a sharp pullback wiped out recent gains. The price failed to reclaim the $90,000–$90,500 band, rolled over, and slid through $88,500 before briefly dipping under $87,000. Buyers did show up around $85,000, but the rebound so far looks more like stabilization than a clear trend reversal. Bitcoin dips hard, finds a bid near $85,000（h3） BTC’s latest move lower began when it couldn’t build follow-through above $90,000 and $90,500. Once that upside stalled, sellers took control and pushed price down through $88,500. The slide accelerated enough to spike below $87,000, but the market didn’t free-fall. Bulls defended the $85,000 zone, printing a low at $85,151. Since then, Bitcoin has been consolidating below the 23.6% Fibonacci retracement of the drop from the $93,560 swing high to the $85,151 low — a clue that the bounce is still shallow and that sellers haven’t fully backed off yet. Structurally, BTC is still on the back foot: It’s trading below $88,000, and It remains below the 100-hour Simple Moving Average, keeping short-term trend pressure pointed downward. Resistance is layered, and $89,000 is the problem area（h3） If bulls try to turn this into a recovery, they’ll have to climb through multiple ceilings in quick succession. First, BTC faces resistance around $87,150, followed by a more meaningful barrier near $87,500. From there, the market’s attention snaps back to $88,000 — the level BTC just lost and now needs to reclaim. A close back above $88,000 would improve the tone, but it doesn’t solve the bigger issue: there’s a bearish trend line on the hourly BTC/USD chart (Kraken feed) with resistance near $89,000, which also lines up with the next technical hurdle. If BTC can push through $89,000 and hold, the rebound could extend toward $90,000, with follow-through targets at $91,000 and $91,500. But until price clears that $88,000–$89,000 zone, rallies are at risk of being sold rather than chased. If BTC fails to reclaim resistance, the downside path is clear（h3） The near-term bear case is simple: if Bitcoin can’t climb back above the $87,000 area and keep traction, sellers may attempt another leg lower. Support levels line up like this: Immediate support: $85,500 First major support: $85,000 Next support: $83,500 Then $82,500 in the near term Below that, the major “don’t break this” level is still $80,000. If BTC slips under $80,000, the risk of acceleration to the downside increases significantly — not because it’s magic, but because it’s the kind of psychological and structural level that tends to trigger forced de-risking. Indicators: momentum still leans bearish（h3） The intraday indicators aren’t offering much comfort yet: Hourly MACD is losing pace in the bearish zone. Hourly RSI remains below 50, suggesting sellers still have the upper hand on short timeframes. So while the $85,000 defense held for now, the market hasn’t flipped bullish — it’s just stopped bleeding.

Author Mitrade

Yesterday 02: 56

Bitcoin has dropped back below $88,000 after rolling over from $90,500, with price still trading under the 100-hour Simple Moving Average. The sell-off found a floor at $85,151, and BTC is now consolidating near that base, but rebounds are facing pressure from a bearish trend line around $89,000. Bulls need to retake $88,000–$89,000 to ease downside risk; failure to do so keeps $85,500–$85,000 and then $83,500 in play, with $80,000 as the deeper “line in the sand.” Bitcoin (BTC) is back in damage-control mode after a sharp pullback wiped out recent gains. The price failed to reclaim the $90,000–$90,500 band, rolled over, and slid through $88,500 before briefly dipping under $87,000. Buyers did show up around $85,000, but the rebound so far looks more like stabilization than a clear trend reversal. Bitcoin dips hard, finds a bid near $85,000（h3） BTC’s latest move lower began when it couldn’t build follow-through above $90,000 and $90,500. Once that upside stalled, sellers took control and pushed price down through $88,500. The slide accelerated enough to spike below $87,000, but the market didn’t free-fall. Bulls defended the $85,000 zone, printing a low at $85,151. Since then, Bitcoin has been consolidating below the 23.6% Fibonacci retracement of the drop from the $93,560 swing high to the $85,151 low — a clue that the bounce is still shallow and that sellers haven’t fully backed off yet. Structurally, BTC is still on the back foot: It’s trading below $88,000, and It remains below the 100-hour Simple Moving Average, keeping short-term trend pressure pointed downward. Resistance is layered, and $89,000 is the problem area（h3） If bulls try to turn this into a recovery, they’ll have to climb through multiple ceilings in quick succession. First, BTC faces resistance around $87,150, followed by a more meaningful barrier near $87,500. From there, the market’s attention snaps back to $88,000 — the level BTC just lost and now needs to reclaim. A close back above $88,000 would improve the tone, but it doesn’t solve the bigger issue: there’s a bearish trend line on the hourly BTC/USD chart (Kraken feed) with resistance near $89,000, which also lines up with the next technical hurdle. If BTC can push through $89,000 and hold, the rebound could extend toward $90,000, with follow-through targets at $91,000 and $91,500. But until price clears that $88,000–$89,000 zone, rallies are at risk of being sold rather than chased. If BTC fails to reclaim resistance, the downside path is clear（h3） The near-term bear case is simple: if Bitcoin can’t climb back above the $87,000 area and keep traction, sellers may attempt another leg lower. Support levels line up like this: Immediate support: $85,500 First major support: $85,000 Next support: $83,500 Then $82,500 in the near term Below that, the major “don’t break this” level is still $80,000. If BTC slips under $80,000, the risk of acceleration to the downside increases significantly — not because it’s magic, but because it’s the kind of psychological and structural level that tends to trigger forced de-risking. Indicators: momentum still leans bearish（h3） The intraday indicators aren’t offering much comfort yet: Hourly MACD is losing pace in the bearish zone. Hourly RSI remains below 50, suggesting sellers still have the upper hand on short timeframes. So while the $85,000 defense held for now, the market hasn’t flipped bullish — it’s just stopped bleeding.

Senate Delays Crypto Market Structure Hearings to Early 2026 The Senate Banking Committee has postponed cryptocurrency market structure hearings until 2026, citing ongoing bipartisan negotiations.

Author Mitrade

Yesterday 05: 56

The Senate Banking Committee has postponed cryptocurrency market structure hearings until 2026, citing ongoing bipartisan negotiations.

Popular Articles

Popular Articles

Popular Articles

Popular Articles

Popular Articles

Popular Articles

Popular Articles

Popular Articles

Popular Analysis

Popular Analysis

Popular Analysis

Popular Analysis

Popular Analysis

Popular Analysis

Top Blog Posts

Top Blog Posts

Top Blog Posts

Top Blog Posts

Top Blog Posts

Top Blog Posts

Top Blog Posts

Beginners

Liquity Protocol investigates potential issues with its V2 stability pools, urges users to close positions

Liquity aimed to recover its growth in 2025

Recommended Articles