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Liquity is a borrowing and lending protocol through which users can obtain loans in the Liquity USD stablecoin (LUSD), by posting collateral. Unlike competitors like MakerDAO, Liquity loans have a 0% interest rate but charge a loan creation fee. The minimum loan amount for Liquity is 2000 LUSD. 

Find this Liquity USD coin news engaging? Proceed to the body and get to know more about the Liquity USD price charts!

What’s on the Liquity USD price charts?

  • The price of Liquidity USD at the time of publishing this piece is $1.02 with a 24-hour trading volume of $484,642. 
  • In the current CoinMarketCap ranking, the LUSD USD project is ranked 230th with a market capitalization of $172,748,868. 
  • There are 168,011,197 LUSD coins in circulation. The emission depends on the TVL on the platform.

Features of the Liquity USD price now

LUSD is a fully redeemable stablecoin. At any time, the system allows holders to exchange their LUSD to USD or to the underlying ETH collateral at face value. For example, a holder who redeems 100 LUSD will receive $100 ETH collateral from the riskiest Trove, minus the current redemption fee.

The redemption mechanism will create a price floor for LUSD, bringing the Liquity USD coin price chart back to parity when it drops below $1. Holders have an incentive to buy back the stablecoin. This occurs if they can buy it at the Liquity USD token price of less than $1 and then convert it to ETH at exactly $1.00. Each redemption results in a reduction in the total supply of LUSD and an adjustment in the base LUSD USD rate.

How closely does LUSD follow the price of the US dollar?

The ability to exchange LUSD for ETH at par value (e.g. 1 LUSD for 1 dollar in ETH) and a minimum collateral ratio of 110% creates a price floor and a price ceiling (respectively) through arbitrage Liquity USD live price chart opportunities. The developers refer to this as a “hard anchor mechanism” as they are based on direct processes.

The Liquity USD price now also benefits from less direct US dollar parity mechanisms called “soft pegs”. One such mechanism is parity as the Schelling point. Since Liquity considers the Liquity USD token price to be equal to the US dollar, parity between the two is the implied equilibrium state of the protocol. 

Another of these mechanisms is the payment for attracting new debts. As the redemption increases (assuming the Liquity USD coin price chart is below $1), so does baseRate, which makes borrowing less attractive, keeps new LUSD out of the market, and lowers the LUSD to USD price below $1.

Liquity USD price prediction

As per the latest Liquity USD coin news, the project feels very good even in the progressing bear market. It’s unsurprising since Liquity is quite a young product that didn’t earn enough popularity among the crypto audience and therefore there isn’t enough info on the project’s plans.

Given that the Liquity USD price prediction for the coming years is only positive.

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