Liquity USD (LUSD) Introduction
Liquity USD is a stablecoin on Ethereum that is closely pegged to the US dollar. It is provided by the Liquity protocol, allowing users to borrow LUSD using ETH as collateral. The main features of Liquity include:
- Decentralization: Liquity is a decentralized monetary protocol that enables users to participate in financial activities without intermediaries.
- Stability: The price stability mechanism of LUSD ensures its value is always pegged to the dollar, allowing users to collateralize ETH to mint LUSD at a price of 1 USD or repay/redeem LUSD at 1 USD to reclaim ETH.
- High Capital Efficiency: Liquity only requires a minimum collateral ratio of 110%, significantly increasing capital efficiency while maintaining the stability of the protocol.
- Multiple Use Cases: The main use cases of Liquity include opening vaults (borrowing LUSD using ETH as collateral), providing LUSD through stability pool for liquidation rewards and Liquity's native incentive token LQTY, staking LQTY to earn fees paid by other users borrowing or redeeming LUSD, and redeeming ETH with LUSD.
Overall, Liquity USD is a stablecoin of significant financial and economic importance, providing a convenient payment tool and store of value.
