Article Summary, Automatically Generated By AI
Summary of Liquity USD (LUSD)
Overview
- LUSD is a USD-pegged stablecoin used to pay out loans on the Liquity protocol.
- It can be redeemed against the underlying collateral at face value.
Founders
- Robert Lauko: founder and Head of Research
- Rick Pardoe: co-founder and Lead Engineer
- Michael Svoboda: CEO
How it Works
- Non-custodial, immutable, and governance-free protocol
- Users can access interest-free loans with less collateral
<
About Liquity USD (LUSD)
Introducing Liquity USD (LUSD): A Stablecoin Solution
Liquity USD (LUSD) is a USD-pegged stablecoin employed to settle loans within the Liquity protocol. At any given time, it can be redeemed at face value against the underlying collateral. To initiate borrowing, a Trove must be opened, necessitating the deposit of a specified amount of Ethereum (ETH) as collateral, thereby enabling the drawing of LUSD up to a collateral ratio of 110%.
Liquity protocol is a decentralized platform that facilitates interest-free loans, collateralized by Ether. To ensure the repayment of these loans, Liquity has established a Stability Pool, backed by LUSD, wherein borrowers assume the role of guarantors for any outstanding debt. As of this writing, the total value locked (TVL) within the protocol exceeds $642 million.
The Visionaries Behind Liquity USD (LUSD): Unveiling the Founding Team
Robert Lauko, a seasoned expert with a background in traditional finance, is the founder and Head of Research at Liquity, where he leverages his proficiency in researching algorithms, network monitoring, and scalability issues to drive innovation.
Rick Pardoe, co-founder and Lead Engineer at Liquity, boasts an impressive academic background, holding degrees in both Physics and Economics.
At the helm of Liquity is Michael Svoboda, a seasoned executive with a proven track record of success. Prior to his current tenure, he held dual roles as CEO and COO at various blockchain companies, leveraging his academic foundation in computer science and economics.
Unveiling the Mechanism of Liquity USD (LUSD)
As stipulated in its official documentation, Liquity is a decentralized protocol that embodies three core principles: non-custodial, immutable, and governance-free. The primary driving force behind its creation is to devise a decentralized and capital-efficient mechanism for borrowing stablecoins.
Through the Liquity protocol, users can gain access to interest-free loans that necessitate less collateral compared to other borrowing systems. Rather than being forced to liquidate their Ether for cash, the Liquity protocol enables users to lock up their Ether and borrow against it, thereby withdrawing LUSD, with the flexibility to repay the loan at a later date.
Alternatively, one can utilize the LUSD coin as collateral when borrowing Ether, subsequently selling it on the open market to acquire additional Ether, thereby creating a cyclical process that can be repeated multiple times.
Additionally, users can accrue LQTY by depositing LUSD into the stability pool, thereby facilitating the pool’s operation through external frontend operators who provide end-user access, and by contributing liquidity to the LUSD:ETH Uniswap pool.
Unveiling the Uniqueness of Liquity USD (LUSD)
The Liquity protocol offers a unique proposition of interest-free borrowing. To ensure stability, the protocol incorporates a dynamic fee structure, which includes one-time borrowing and withdrawal fees that adjust automatically in response to the timing of withdrawals. For example, in the event of frequent withdrawals, the borrowing fee will increase to deter excessive borrowing.
In contrast to systems like MakerDAO, which employ variable interest rates to regulate borrowing dynamics, Liquity adopts a decentralized, direct feedback mechanism through one-time fees. This approach empowers borrowers with upfront transparency into cost fluctuations, thereby circumventing the need for intricate governance procedures.
What Is the Circulating Supply of Liquity USD (LUSD) Coins?
As of this writing, the current circulating supply of LUSD stands at 92,482,286 units.
The Security Architecture of the Liquity USD (LUSD) Network
LUSD is an ERC-20 token minted on the Ethereum blockchain, which is fortified by the Proof-of-Stake (PoS) consensus algorithm. To participate in the validation process and verify transactions, validators are required to stake 32 ETH, thereby ensuring the integrity of the network.
Where to Acquire Liquity USD (LUSD): A Comprehensive Guide
LUSD can be acquired on prominent centralized exchanges, including Binance, Coinbase, KuCoin, Gemini, Gate.io, OKX, and several others. Additionally, it is available for trading on decentralized exchanges, such as Uniswap (V3) and Balancer (V2), among others.
Stay up-to-date with real-time LUSD price movements at your fingertips with the CMC mobile app.
Associated Resources:
Delve into the intricacies of the Liquity protocol, a revolutionary decentralized borrowing system.
Discover the pioneering decentralized stablecoin, MakerDAO and DAI, a trailblazing force in the cryptocurrency landscape.
Delve into the world of decentralized stablecoins with our in-depth exploration of Dinero, crvUSD, and GHO.
Delve into the world of decentralized stablecoins with our comprehensive CMC glossary.