> For the complete documentation index, see [llms.txt](https://jpydf.gitbook.io/jpy-defi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://jpydf.gitbook.io/jpy-defi/introduction/built-on-liquity-v2.md).

# Built on Liquity v2

JPY DeFi is built from the Liquity v2 code. It inherits the Liquity v2 accounting for borrowing, liquidation, and redemption.

## What Liquity v2 is

Liquity v2 is a borrowing protocol that issues its own stablecoin, BOLD, over-collateralized by crypto assets. Its code cannot be changed after deployment, and no operator holds users' assets. It is known for letting borrowers set their own interest rates, liquidations through the Stability Pool, and using redemptions to support its price target.

## Differences from Liquity v2

The JPY DeFi Core is not identical to the Liquity v2 code; the changes JPY DeFi needs are managed as tracked differences. The code version it is based on and the main differences are in the [Architecture Overview](/jpy-defi/technical-information/architecture.md).

Keeping the differences small lets JPY DeFi reuse the design validated in Liquity v2 and reduces how much must be rebuilt independently. Collateral custody and external deployment, backing-ratio pricing, and price-source replacement are implemented in JPY DeFi's own layers outside the Core. For collateral and price, the Core sees only the collateral token (dToken) and the price feed.

The diagram separates JPY DeFi's collateral layer from the Liquity-based borrowing Core.

![Deposit underlying into a Vault, use the minted dToken as Trove collateral, and receive JPYdf](https://2664012221-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2Fk6OsOkfOCs0PpKCrImRu%2Fuploads%2Fgit-blob-45aca81ba885a3fd342e778a2002570d187656ca%2Fborrowing-model.png?alt=media)

## License (Friendly Fork)

JPY DeFi issues the stablecoin JPYdf under Liquity v2's Friendly Fork framework. Liquity's upstream audits and invariants are useful baseline evidence, but they do not by themselves validate JPY DeFi-specific differences or external layers.