Permissioning

Provide users with protections over protocol access for compliance, while ensuring composability with the rest of the DeFi ecosystem

Liquid Collective is designed to provide users with protections over protocol access via know-your-customer (KYC) and anti-money-laundering (AML) verification, while still ensuring composability with the rest of the DeFi ecosystem.

This facilitates compliance by providing the level of counterparty risk management required for enterprises and institutions to participate in staking on the protocol.

The Liquid Collective protocol:

• Requires users to be on the Allowlist before they can deposit ETH or redeem LsETH

• Enables users to transfer LsETH freely

Liquid Collective works with a variety of Platforms, including trading venues and custodians, to provide a seamless on-ramp for the protocol’s stakers. KYC’d users who utilize a Platform’s services to allowlist their wallet can deposit to Liquid Collective and mint LsTokens.

Allowlisting

Participation in Liquid Collective's smart contracts is restricted to allowlisted wallet addresses. This is meant for compliance purposes, ensuring that any user who wants to stake first completes a review and approval process (typically a know-your-business (KYB)/ know-your-customer (KYC) process).

The Liquid Collective Allowlist smart contract holds:

• An Allowlister, which is a trusted party responsible for allowing users to participate in the Liquid Collective protocol. Typically Platforms that enable minting and redemption (ex. a custodial Platform performing KYC/AML checks on their customers) submit a user's wallet address to the Allowlister for subsequent addition to the Allowlist

• An Allowlist of depositors with their permissions over the protocol (deposit, withdraw)

When a depositor wants to stake with the Liquid Collective protocol, their address must first be added to the Allowlist and be granted the corresponding permissions. Learn more about the type of Platforms that add users to the Allowlist in the Platform Operations documentation.

Access protections

To meet the compliance needs of Liquid Collective participants, the Liquid Collective protocol has an "access denial" mechanism for blocking individual Ethereum addresses from sending, receiving, minting, redeeming or claiming LsETH. The protocol does not have any mechanism for forcing a transfer of LsETH, reversing a transfer of LsETH or otherwise altering the balance of LsETH at an address.

The Liquid Collective's policy is that access will only be denied where there is a determination that not denying access to an address presents a threat to the security, integrity or reliability of the protocol. Examples of such circumstances include security breaches or legal requirements.

Requests by third parties for denial of access to an address must be submitted in writing to [e-mail]. This policy and compliance with a request do not constitute acknowledgment or attornment by The Liquid Foundation or any other participant in the Liquid Collective to laws to which that participant is not already subject.