The $USDC is back to 1$ but trust in centralized stablecoins like $USDT and $BUSD is damaged.

$LUSD allows you to earn from:

• Real Yield

• $LUSD bonds

• $ETH liquidations

The gold rush for decentralized stablecoins has started.

Today, you'll learn:

What is $LUSD & $LQTY?

Why everybody talks about them.

How to profit from them

What innovations do they bring in?

Why are they the most #decentralized?

I. Liquity as a DeFi protocol is:

#Immutable

#Non-custodial

#Governance-free

Besides collateral, the loans are secured by a Stability Pool.

This pool contains $LUSD and other borrowers collectively acting as guarantors of

last resort. How does it work?

II. Use cases of Liquity:

Borrow $LUSD against $ETH

Secure Liquity by providing $LUSD to Stability Pool

Stake $LQTY to earn the fee revenue paid for borrowing or redeeming $LUSD.

Redeem 1 $LUSD for 1 USD worth of $ETH when the $LUSD peg falls below $1.

Real yield?

III. You can earn a yield on @LiquityProtocol with:

$LUSD bonds

Staking - $LQTY

Stability Pool - $LUSD

Let's quickly explain each method.

IV. $LUSD bonds

$LUSD Chicken Bonds offer an amplified yield-earning and trading opportunity for $LUSD holders.

This also helps stabilize the price of LUSD and improve its liquidity.

These bonds have no maturity date.

This means: Bonded funds are always withdrawable.

Bond benefits

Bond captures an amplified,auto-compounded yield, which can be either held or traded.

Yield amplification is achieved by having three different sources directing their yield to $bLUSD

Bond itself is technically represented as an NFT which can be sold on #OpenSea.

Benefits of $bLUSD

It offers a higher yield compared to depositing $LUSD in Stability Pool

Yield produced is automatically harvested and compounded.

It’s an ERC-20 token that can be used as collateral with a rising floor

price(measured in $LUSD)

V. Chicken In/Out

You create a bond with $LUSD and receive $bLUSD.

You have two options now:

Claim bond (Chicken In)

Cancel bond (Chicken Out)

A fresh bond starts accruing $bLUSD rapidly, and as time passes, the accrual rate

slows down. Each option is described below:

VI. Bond strategies you can use.

There are 4 main strategies, be:

Traders

Bonder

Treasure

Liquidity provider

If you are more interested in detail, check their blog below. The team explained

each strategy with ease.

VII. Stability Pool - $LUSD

Deposit $LUSD to Stability Pool to:

Earn $LQTY rewards.

Earn $ETH from liquidations.

Current APR ≈ 8,42%

It's not nice to say, but:

More liquidations = More $ETH for YOU. Check the easy example below:

Where are liquidations coming from?

Trove.

A Trove is where you take out and maintain your loan.

In other words where you deposit $ETH to take out a $LUSD loan.

If $ETH price starts to dump, and you don't:

Add collateral.

Start to repay debt.

You will occur liquidation.

VIII. Staking - $LQTY

Stake $LQTY to earn a share of protocol fees in:

• $ETH

• $LUSD

Once staked, you will start earning a pro-rata share of the borrowing and

redemption fees.

#LiquityProtocol ranked 36 on #DefiLlama by fees in the last 30 days.

≈ $754k in #RealYield

IX. Redemptions

The process of exchanging 1 $LUSD for 1$ worth of $ETH at face value.

Users can redeem their $LUSD for $ETH at any time without limitations. Redeemed

$LUSD is burned.

A redemption fees might be charged on the redeemed amount.

Why?

The redeemed amount is taken into account for calculating the redemption fee.

As redemptions increase (implying $LUSD is below $1), so does the baseRate -

making borrowing less attractive.

This keeps new $LUSD from hitting the market and driving the price below $1.

X. Price stability

The price floor and price ceiling are accomplished by:

The minimum collateral ratio of 110%

Borrowing& redemption fees

Parity as a Schelling point

For more details about each mechanism, check the blog below:

Innovation

Every time someone redeems their $LUSD, protocol pays off loans with the lowest

collateral.

This mechanism protects #Liquity from liquidations, by paying the riskiest loans.

You as a borrower do not incur a net loss. But, you will lose some of your $ETH

exposure.

XI. Safer way to access $LUSD

If you don't want to put your $ETH as collateral to get $LUSD, you can swap it on DEX or CEX

DEXs:

Uniswap

Curve

CEX:

Gemini

Censorship resistant

No regulator can prohibit $LUSD issuance.

Its protocol is fully operated by code. The code is immutable.

Decentralization as we need.

XII. $LQTY Tokenomics

Circ. supply-91M

Max supply-100M

Market Cap-$225M

You can earn $LQTY by:

Depositing $LUSD into the Stability Pool

Providing liquidity to the LUSD/ETH Uniswap pool

Facilitating Stability Pool deposits through your front end

Stake $LQTY to earn fees.

XIII. Partners

They partnered up with some of the strongest players in crypto:

@PanteraCapital

@polychain

@NexusMutual

@synthetix_io

@coinbase

@VelodromeFi

@OlympusDAO

@Gemini

@HuobiGlobal

The recent market instability surrounding the USDC stablecoin and the closure of three cryptocurrency-friendly banks has led to a surge in the value of Liquity’s LQTY token.

LQTY is a secondary token of Liquity, a decentralized lending platform that allows users to collateralize ETH and borrow the stablecoin LUSD. The USDC peg loss has forced users to shift to other stablecoins to avoid risks, and Liquity’s LUSD stablecoin has capitalized on this, leading to an increase in user adoption of the platform.

According to Andrew Thurman, Head of Research at Nansen, Liquity’s LUSD stablecoin has gained significant attention in the market during the USDC peg loss crisis, and this has led some investors to switch to the Liquity platform. Since March 6, Liquity has recorded a 10% increase in the number of wallets holding LUSD, according to data from Nansen.

As a result, the value of LQTY has skyrocketed, surged more than 130% since March 10, gaining 340% within a span of 30 days, and reaching an all-time high of $3.85. Currently, LQTY is trading at around $3 with a market capitalization of $293.9 million, according to CoinGecko.

LQTY generates revenue from fees created by the Liquity protocol, which is used to incentivize early users. Rather than charging fluctuating interest rates for borrowing, Liquity charges a one-time fee for users, and its interest rate is fixed at 0%. The total supply of LQTY is limited to 100 million tokens.

According to Etherscan, over 49 million LQTY tokens worth approximately $153 million have been staked, representing around 52% of the total supply of LQTY. Liquity’s TVL has reached $679.5 million, according to DeFiLlama data. Dune Analysis data shows that the project has generated revenue of $30.9 million and has lent approximately 4.48 billion LUSD over its operating period.

In addition, as reported by AZCoin News, LQTY has benefited from Binance’s recent efforts to access new stablecoin projects such as TUSD and LUSD at the end of February. During this time, Paxos, the company behind BUSD, was required by the New York Department of Financial Services (NYDFS) to stop minting BUSD.

Binance has opened trading for LQTY/BTC and LQTY/USDT pairs since February 28. Currently, this top trading platform owns around 11.57% of LQTY’s total supply, according to Nansen.

Overall, the market turbulence surrounding USDC and the closure of cryptocurrency-friendly banks have boosted Liquity’s LQTY token’s value. The platform’s adoption rate has risen as a result of its LUSD stablecoin’s performance during this crisis. With the growing number of users and the platform’s significant TVL, LQTY could be a token to watch in the coming months.

#LQTY #Liquity

This article was republished from azcoinnews.com