Liquid Loans — mint USDL against ETH or PLS, and repay when you choose
Liquid Loans
0% interest on Base and PulseChain
Liquid Loans is a non-custodial borrowing protocol with two deployments. On Base the collateral is ETH. On PulseChain the collateral is PLS. You lock that coin in a vault tied to your address and mint USDL, a stablecoin the system treats as one dollar of that collateral. Interest does not accrue. There is no due date. You close the vault by repaying the debt.
The ongoing rate is 0%. Drawing USDL still adds a one-time borrowing fee, between 0.5% and 5%, and sets aside 200 USDL as a liquidation reserve that comes back if you repay. The minimum collateral ratio is 110%. Below that, the vault can be liquidated. The second token is LOAN. It is not a governance token. Depositing USDL in the Stability Pool earns it, and staking it earns a share of the borrow and redemption fees.
The contracts are immutable. No admin key can change the rules after deployment. Halborn audited the protocol. The Base deployment is a fork of the PulseChain contracts, with the oracle and the exchange pointers changed, and it carries the same risks. This paper covers the two tokens, how a vault is opened and closed, how the Stability Pool and LOAN work, and how to use a position without getting liquidated.
Two tokens, two chains
Each chain has its own USDL and its own LOAN. They are not one token bridged between Base and PulseChain. A vault on Base is backed by ETH. A vault on PulseChain is backed by PLS. Redeeming USDL pays you the collateral of that deployment, minus a fee, not a dollar in a bank account.
- USDL is the stablecoin you mint. It is meant to stay near one dollar because the system stays over-collateralized, because anyone can redeem it for a dollar of collateral, and because a variable issuance fee slows new minting after heavy redemptions.
- LOAN captures fee revenue. Max supply on both chains is 5.5 trillion. It does not vote, and staking it does not backstop the debt.
- ETH or PLS is the only collateral on that chain. Base accepts ETH. PulseChain accepts PLS.
The uses are borrowing, depositing USDL in the Stability Pool, staking LOAN, redeeming USDL for collateral, and buying USDL under a dollar to redeem it. The yield paths are written out on the LOAN and Stability Pool pages.
How a vault works
A vault is one address’s collateralized debt position. Each address has one. It holds two balances: collateral, and debt denominated in USDL. You can add collateral or repay debt at any time. You can close it by paying the debt in full. Repayment, as a borrower, is free of the redemption fee. Drawing more USDL is not free.
- Open and deposit. ETH on Base, PLS on PulseChain. Gas is the native coin of that chain.
- Draw USDL down to a collateral ratio of 110%. The smallest draw is 2,000 USDL. A 200 USDL liquidation reserve is added to the debt and returned if you repay without being liquidated. The one-time borrow fee, 0.5% to 5%, is added to the debt as well. At a 0.5% fee, a 4,000 USDL draw leaves the borrower with 3,781 USDL after the reserve and the fee.
- Hold the ratio. If ETH or PLS falls, the ratio falls with it. At 110% a vault with 10,000 USDL of debt needs $11,000 of collateral. Staying above 150% is the room you want before Recovery Mode.
- Repay to unlock, or leave it open. There is no schedule. A liquidation, or a redemption against a low-ratio vault, can change the position without you sending a transaction.
If the vault is liquidated under the 110% line, you keep the USDL you already took and you lose the collateral. At the minimum, that loss is 9.09% of the collateral’s dollar value, the gap between 100% and 110%. The caller who liquidates you is paid the 200 USDL reserve plus 0.5% of the collateral. Anyone can call it. The debt is absorbed by the Stability Pool when that pool has the USDL. If the pool is empty, the debt and collateral are redistributed across the other vaults.
| Normal operation | Recovery Mode | |
|---|---|---|
| When | System collateral ratio at or above 150% | System collateral ratio under 150% |
| Your vault is liquidatable below | 110% | 150%, if the Stability Pool can cover the debt |
| Borrow fee | 0.5% to 5% | 0%, and new debt must not worsen the system ratio |
| A vault at 150% or higher | Not liquidated for the ratio alone | Not liquidated |
Recovery Mode is the response to a weak collateral ratio across every vault. It is not a pause. Borrowing that would push the system further under 150% is blocked. A vault liquidated while its own ratio is between 110% and 150% loses collateral equal to 110% of its debt. Anything above that is claimable surplus. The borrowing fee drops to zero while this mode is on, so that new, well-collateralized vaults are cheaper to open. Redemption fees do not drop with it.
Stability Pool, LOAN, and the peg
The Stability Pool is USDL that other people have deposited. When a vault is liquidated, USDL in the pool is burned to cancel that debt, and the vault’s collateral is shared out to depositors in proportion to their deposit. Because the close happens just under 110%, depositors are expected to receive more dollars of collateral than the USDL they lose. They can withdraw that collateral immediately. They also accrue LOAN. Withdrawals are suspended while any vault is sitting under 110% and has not been liquidated yet. There is no lockup otherwise.
That expectation fails if a vault is liquidated under 100%, which can happen in a flash crash or from a bad oracle print, or if you sell the collateral into a falling market. On Base the price feed is Chainlink’s ETH:USD, with Tellor as the fallback if Chainlink has not updated for more than four hours, if the call reverts, or if the price jumps more than 50% between updates. PulseChain uses its own price feed contract, a decentralized PLS:USD price.
LOAN from the pool, or bought on a market, can be staked. Staking pays your share of the borrowing fees and the redemption fees, in USDL and in the chain’s collateral, taken at the moment the fee is charged. You can unstake at any time. Staked LOAN is not a backstop and it does not govern anything. A separate slice of LOAN is reserved for the team and for advisors. On PulseChain that slice is unreachable for at least a year. On Base a portion is paid monthly during the first year. An admin address can move tokens only into those lockup contracts. It has no control over the protocol once the system is deployed.
The peg is a redemption, not a promise from a market maker. Any USDL holder can hand USDL back to the system and receive a dollar of ETH or PLS, minus a redemption fee of baseRate + 0.5% on the collateral drawn. The system takes that collateral from the vaults with the lowest collateral ratios first, even when those vaults are safely above 110%. Your debt falls by the same dollar amount. You do not take a net loss on that slice, but you do lose exposure to the coin. Debt In Front is the USDL sitting in vaults riskier than yours. A higher ratio moves you back in that line. Redemptions are blocked when the whole system is under 110% collateralized, and they are disabled for the first 14 days after a deployment. Repaying your own vault is a different action. It does not redeem against other people, and it does not charge this fee.
The borrow fee and the redemption fee share one base rate. Each redemption pushes the rate up in proportion to how much of the USDL supply was redeemed. The rate then decays until the next redemption or the next mint. The floor is 0.5%, except in Recovery Mode where the borrow fee is zero. The borrow fee caps at 5%.
Where the collateral sits
Usage of the protocol so far: 9,325 or more wallets have connected, with no signup and no KYC. 6,635 or more addresses have staked. 1,578 or more addresses have owned a vault. More than $6.1 million of USDL has been minted. Users have earned more than $11 million in fees since launch. A 12-month comparison put a vault at 31.0%, gold at 28.0%, and a high-yield savings account at 4.6%. That comparison includes the price of the collateral. A 0% interest rate is not the same number as that return.
PulseX, Piteas, and PulseSwap trade on PulseChain. USDL minted here is not PLS, and it is not the USDC those apps bridge. PulseChain has a WPLS/USDL pair on PulseX. Base has an ETH/USDL pair on Uniswap. Those are markets. The redemption inside the protocol is the path that does not depend on them. Contract addresses for both deployments are on the contracts page.
Opening one
- Pick the chain. Base for ETH. PulseChain for PLS. The two vaults do not share a pool of coins, and the token addresses are different.
- Connect a wallet. There is no account. You need the native coin for gas and enough collateral to support at least a 2,000 USDL draw after the 200 USDL reserve and the fee.
- Mint less than the maximum if you want the ratio above 150%. At 110% a small drop liquidates you. In Recovery Mode, 150% is the line that keeps the vault closed.
- Read Debt In Front if the interface shows it. The lowest-ratio vaults are redeemed first when someone swaps USDL for collateral.
- If you want the other side of a liquidation, deposit USDL in the Stability Pool. If you want the fees, stake LOAN. Neither of those is the vault.