# Liquidity Protocol

A **liquidity protocol** is a decentralised system of smart contracts that facilitates the transfer of digital assets. As a leading liquidity protocol that operates on a supply and borrow model, <code class="expression">space.vars.FORK\_NAME</code> enables users to supply their assets to liquidity pools and, in return, allows other participants to borrow from those pools using their own collateral. The protocol currently operates on the Somnia network, with potential for future multi-chain expansion.

One of the key features of a decentralised liquidity protocol is its non-custodial nature, meaning users maintain control over their assets at all times. Interaction with the protocol happens through self-custodial wallets, allowing users to supply or borrow funds directly, without relying on intermediaries. All of this is managed through publicly accessible and permissionless smart contracts, which execute and verify transactions based on predefined conditions, such as collateral ratios and market parameters, providing a transparent and trustless experience.


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