Liquity USD (LUSD) Feed: Events, News & Roadmap

What is Liquity USD?

Liquity USD (LUSD) is a decentralized protocol underpinned by the Ethereum blockchain, enabling users to secure interest-free loans using ETH as collateral. The protocol introduces Liquity USD (LUSD), a stablecoin pegged to the US dollar, utilized for loan payouts. A key feature of LUSD is that it can be redeemed against the underlying collateral at face value, providing a high degree of liquidity.

The working principle of the Liquity protocol involves users opening a “Trove” (a personal smart contract) and depositing ETH as collateral to obtain a loan in LUSD. The protocol requires a minimum collateral ratio of 110%. To ensure stability, Liquity uses a Stability Pool, where LUSD can be deposited by borrowers, essentially acting as guarantors for any outstanding debt. This innovative approach to lending provides a capital-efficient method to borrow stablecoins.

The LUSD token serves as an integral component within the Liquity ecosystem. It can be used as collateral to secure additional ETH loans, which can then be sold on the open market to acquire more ETH creating a cyclical borrowing process. Furthermore, LUSD holders can earn Liquity (LQTY) tokens, another native asset of the Liquity protocol, by depositing LUSD in the stability pool or providing liquidity to the LUSD:ETH Uniswap pool.