What is Liquity USD (LUSD)?
Liquity USD is a stablecoin pegged to the USD that was created by Liquity, a decentralized financing protocol that permits users to take out no-interest loans with Ether as collateral. The loan is given in the form of LUSD and must maintain a minimum collateral rate of 110%. Additionally, the loans are defended by a Stability Pool made up of LUSD and other borrowers acting together as backup sponsors. Liquity as a protocol does not require custodianship, has set rules, and lacks governance. This is all done to make sure decentralization remains uninterrupted. On the Liquity USD price chart featured above, you can observe the current and the previous LUSD price, as well as its recent movements.
Besides, apart from the LUSD token, the Liquity platform also has another token – LQTY. It's a secondary token of the protocol that can be staked by holders in order to generate a portion of fees collected from loans.
LUSD Use Cases
In essence, LUSD coins are used for paying out loans on the protocol. Besides, the protocol employs a two-step liquidation system that results in low collateral rates while ensuring stability. When users wish to return their LUSD coin, they receive ETH worth its face value minus a redemption token fee. As all protocols are predetermined algorithmically, there is no need for governance or voting on financial decisions, making it rigid yet independent of external control.
Besides, note that, since LUSD is a stablecoin, the Liquity USD price tends to stay relatively stable. Check out the LUSD price chart above to see that yourself.
Who Founded Liquity?
Robert Lauko, a Swiss with a Ph.D. in law and prior experience as a law clerk in different legal organizations in Switzerland, changed his focus to blockchain research. Having worked on consensus algorithms, blockchain layers, and incentive mechanisms for over five years, he founded Liquity alongside Rick Pardoe – another founder of Liquity who had previously created a solidity decimal math library to revolutionize decentralized borrowing. Both Robert and Rick have expertise in developing secure back-end smart contracts.
