Frequently Asked Questions
Everything you need to know about the LIQUID Protocol
LIQUID is a pure store of value token within the Hyperliquid ecosystem. It's designed to maintain long-term value through a combination of fixed supply, dynamic tax mechanisms, and protocol-controlled liquidity.
The sell tax adjusts based on market conditions. It increases on sells and decreases on buys, with throttled adjustments and cooldown periods to prevent manipulation. This mechanism helps maintain price stability while discouraging excessive selling.
The FMU is an immutable contract that manages protocol liquidity, fee claiming, and tax routing. All LP tokens are locked within this unit, ensuring that liquidity remains secure and controlled by the protocol.
VCMs are NFT-based access points that allow holders to create and manage reward streams. They earn HYPE rewards while helping maintain protocol stability through their management of liquidity flows.
The exit queue is a FIFO-based system that allows users to convert LIQUID to HYPE tax-free. The delay period is based on the size of the exit, with larger exits requiring longer waiting periods to maintain protocol stability.
Initially, 100% of LIQUID fees are burned. After reaching a benchmark, 90% of fees continue to be burned while 10% are distributed as HYPE rewards to VCM holders.
LIQUID has a fixed total supply with no minting capability. The initial distribution was 100% seeded to the Uniswap v3 LIQUID/HYPE pool.
You can participate by holding LIQUID tokens, becoming a VCM holder to earn rewards, or providing liquidity to the LIQUID/HYPE pool. Each role contributes to the protocol's stability and growth.
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