New $Liquity on Binance is a decentralized lending platform that accepts ETH as collateral and lends out the stablecoin #LUSD. LQTY is a Token used for functions such as staking and liquidity mining, and its LUSD is a stablecoin that is both censorship-resistant and decentralized.
The following is a brief introduction to the prospects and difficulties of $LQTY from the aspects of value anchoring, anti-censorship, capital efficiency, and ecology.
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① Value anchoring
In order to ensure that the value of the stable currency is anchored, the mortgage assets only support ETH. In addition, in order to prevent the potential risk of decoupling, LUSD provides a mechanism to redeem ETH at 1 US dollar. There is an underpinning mechanism in terms of value; in addition, the setting of a multi-level settlement mechanism , the pool will not be drained instantly, which is equivalent to risk isolation.
② Resistance to censorship
LUSD has multiple backup front-end Dapps and will not suffer from situations like Tornado being banned and users being unable to use it; and the contract is not upgradeable to prevent the introduction of new risks;
③ Higher capital efficiency
LUSD lending has the lowest mortgage rate in DeFi at 110%, and you can borrow stablecoins through Liquidity and only need to pay a one-time borrowing fee of 0.5% to obtain zero-interest borrowing rights.
④ Ecological aspects
The current protocol asset size is $599.95m, with the peak reaching $4.52B. It has been listed on the exchanges Coinbase & HuoBi, with a short-term increase of more than 30%. LUSD has experienced several market crashes and stablecoin liquidations, and finally relied on its multi-level liquidation mechanism to hold on, and even "unanchored" many times.
⑤ Stable currency but lacks liquidity
LUSD can be said to be a project that implements the concept of decentralization to the extreme. However, LUSD is in a closed system, and multi-level settlements cause liquidity isolation. Secondly, the utility of $LQTY is still limited. As an emission incentive token, LUSD is the ultimate In contrast to the randomness of LQTY, it is like a "mascot" in the system, without too much value capture. Perhaps the management token function will be launched in the future.
