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:
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
