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