# General

### What is Liquity v2?

Liquity v2 is a decentralized borrowing protocol that lets users deposit ETH or LSTs as collateral, and mint the stablecoin BOLD.

There are 4 main use-cases:

* Borrow BOLD
* 1-click multiply (staked) ETH
* Earn yield by depositing BOLD
* Stake LQTY to direct PIL and earn

### What are the differences to V1?

While there are plenty of changes coming with V2, it will keep the things V1 is known for:

* Immutability
* Decentralization
* Rigorous security
* No TradFi exposure

However, V2 is innovating on multiple fronts:

* User-set interest rates - more control over your borrowing cost
* New collateral types - ETH and LSTs
* Improved redemption mechanism
* Protocol-incentivized liquidity (PIL)
* More attractive short-term loans
* Improved capital efficiency
* Multiple Troves per address (and transferable)
* No Recovery Mode
* Looping/one-click multiply

### What happens to Liquity v1 and LUSD?

Liquity V1 is here to stay: it is battle-tested, and LUSD is the stablecoin of choice for users who prefer a pure ETH backing.

### Does Liquity V2 have governance?

Liquity V2 is subject to minimal governance which is solely tasked with distributing Protocol Liquidity Incentives (PIL), directing 25% of the protocol's revenue to external initiatives.

Governance has no other functions or powers, as Liquity V2’s smart contracts are immutable and not upgradeable.