Summary
Liquity’s stablecoin LUSD has seen its market capitalization decrease by half in the past six months as investors seek higher DeFi yields. However, LUSD recently jumped to $1.03 after a wealthy investor paid off $20 million in LUSD-denominated debt, leading to an increase in price. The trades were routed through Curve Finance, and the biggest LUSD pool saw its reserves nearly depleted. LUSD has since settled to $1.01 and may experience slower redemptions as it is still trading above its peg. Liquity charges a one-time fee to borrowers, and the protocol’s documentation states that the fee fluctuates between 0.5% and 5%. The decrease in LUSD’s market capitalization can be attributed to factors such as arbitrage bots, less demand for stablecoins, and the availability of higher-yielding assets.
Key Points
1. Liquity’s stablecoin LUSD has seen its market capitalization decrease by half in the past six months as investors pursue higher yields in the DeFi sector.
2. LUSD recently experienced a rally, reaching $1.03 after trading below its intended dollar peg since July. This increase in price was attributed to a wealthy investor paying off $20 million in LUSD-denominated debt, leading to a surge in demand.
3. The LUSD stablecoin has since settled at around