EP #240 - Robert Lauko: Interest-Free Borrowing On The Blockchain

Robert Lauko is the co-founder and CEO at Liquity, a decentralized protocol that enables interest-free borrowing on the blockchain. He studied Microengineering at EPFL but then switched to Law at UZH. Robert worked for several years as a lawyer before pivoting to blockchain research. He worked as a researcher at DFNITY for 2 years before creating his own venture.

To understand what Liquity allows you to do, let’s compare two lending scenarios:

1. You take out a loan from a bank to buy something like a house or a car. Whatever you have bought will then serve as collateral for the bank, meaning that if you default on your loan (= fail to pay it back), the thing you bought gets taken away and is sold by the bank, so that the bank can cover its costs.

2. You buy Ether and place it in the Liquity platform (or simply use the Ether you already owned), and then you take out a loan against it, meaning the Ether is your loan’s collateral. The loan you take out is in LUSD, a fully backed stablecoin pegged to the US Dollar that's maintained by an algorithmic monetary policy. The value of the Ether has to be 110% of the loan, otherwise you can get liquidated. You pay no interest and there is no repayment schedule.

Memorable Quotes:

"It’s yet to be seen how sustainable the NFT craze is, but I don’t think it makes DeFi redundant. There are good ways for combining the two, and either way there’s enough space for the both of them."

Resources Mentioned:

Binance Academy

If you would like to listen to more episodes about the blockchain, check out our most recent conversation with Julian Liniger.

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