Owning LQTY: Uses, Storage and Risks

LQTY is Liquity’s protocol token, not the stablecoin you borrow and not the collateral used for a loan. Its main stated use is staking: staked LQTY can capture fee revenue generated by the Liquity Protocol. That does not make staking returns fixed or guaranteed; revenue can vary, and the token’s market price can move independently of any fees it earns.

Liquity is a decentralized borrowing protocol. The original version lets users borrow LUSD against Ether without ongoing interest, subject to collateral and liquidation rules. Liquity V2 offers borrowing against ETH and staked ETH with a user-set rate. These borrowing features belong to the protocol, not to LQTY itself: you do not need to treat LQTY as a stablecoin or assume that holding it gives you a loan. Before using a Liquity product, check which version and borrowing terms a frontend supports. Borrowing introduces collateral and liquidation risks that are separate from the risks of simply holding LQTY.

LQTY is issued on Ethereum and Arbitrum, but it is not the native gas token of either network. On Ethereum, you need ETH for transaction fees; on Arbitrum, you generally need ETH on Arbitrum. A wallet must support the correct network and LQTY token contract for your balance to appear and transfers to work.

Before sending LQTY, confirm the receiving wallet or exchange supports deposits on the exact network you plan to use. An Ethereum deposit address does not automatically mean an exchange accepts an Arbitrum transfer to it. Sending on an unsupported network can make funds difficult or impossible to recover. If you move tokens between networks, check the bridge or transfer method carefully and account for its separate contract and operational risks. Fees vary with network conditions, and the token itself does not pay those fees. Never rely on a token name or ticker alone to identify a contract; verify the network and contract through a trusted wallet or official Liquity materials.

The stated maximum and total supply are 100 million LQTY. About 98.85 million were circulating as of 2026-11-08, so roughly 1.15 million were outside the reported circulating supply at that point. Circulating supply can change, and a maximum supply is not the same thing as the amount available to trade.

Supply figures do not tell you what LQTY is worth or how much fee revenue staking may generate. Those depend on market demand, protocol activity and other factors that can change. If you are evaluating a balance, check a current supply figure rather than treating this dated snapshot as live. Also distinguish token supply from market capitalization: market capitalization is a moving estimate based on price and circulating supply, not cash held by Liquity or a measure of funds you could withdraw. No price target or past high can establish what the token will be worth later.

For self-custody, use a wallet that supports the network holding your LQTY, protect its recovery phrase offline, and never share that phrase or a private key. Confirm the chain and destination address before sending a test-sized amount, especially when moving between Ethereum and Arbitrum. For a hardware wallet, keep the recovery backup separate from the device and beware of fake wallet software or support accounts asking for it.

The main risks differ depending on what you do. A holder faces token-price volatility, smart-contract or custody failures, and mistakes when choosing a network or token contract. Staking adds contract and operational risks, and fee revenue is not guaranteed. Borrowing against ETH or staked ETH adds liquidation risk: if collateral value or protocol conditions breach the required limits, collateral may be liquidated. Liquity’s non-custodial design does not remove these risks, and a third-party frontend can create its own security or availability problems. Use only an interface you have independently verified and do not borrow more than you can manage under adverse conditions.