- Depositing LUSD into the Stability Pool
- Frontend operators that earn a 'kickback rate' from stability pool deposits β
Anon, can you remind me what the stability pool is? π€
2/ The Stability Pool is the liquidation mechanism of Liquity
Liquidation gains (in ETH) & rewards (in LQTY) are distributed to users who deposit LUSD in the Stability Pool as a compensation for upholding the liquidation mechanism of the protocol
A 𧡠on how the LQTY token works, and how stakers can earn yield in two of the most unstoppable tokens around:
- LUSD π΅
- ETH π¦π
A quick refresher π π§΅
Stakers of LQTY can earn fees generated on two fronts:
Loan issuance (paid out in LUSD)
Redemptions (paid out in ETH)
So how come the sudden huge spike in yield for stakers this week?
π
An independent whale minted $52m LUSD across multiple transactions, resulting in 270k LUSD being generated in loan fees for the protocol (aka LQTY stakers πΈ )
The π also sold some of their LUSD to ETH, causing some redemptions to take place, which further added ETH rewards π€
The @Balancer governance just approved the addition of $BAL rewards to the "Trinity" pool - $LUSD / $wETH / $LQTY - gauge
π Thanks, to the ballers for their support: looking forward to the next steps!
It's an essential part of LUSD's liquidity strategy, a quick threadποΈ
1/7
So far, the main liquidity source for $LUSD is @CurveFinance LUSD/3CRV pool, a staple to sustain stablecoins' liquidity
However, with LUSD's premium, the stableswap formula is not as efficient as it could be
Having x*y=k type LUSD liquidity can help improve the situation
2/7
Indeed, x*y=k and its variant maximize liquidity availability, which helps to ensure a baseline $LUSD liquidity is secured, no matter what happens on the markets, even on days where liquidity needs are intense, such as when the $ETH price is depreciating.
3/7
$1 LUSD = $1 on Liquity, forever and always βοΈ
With LUSD being above peg at $1.03, what does this mean? π‘
It becomes all the more interesting for DAOs that have large ETH treasuries π§΅
When LUSD is at $1.00 Liquity's maximum leverage ratio for users longing ETH is 11x (110% min LTV).
At the current price of 1.03, it makes the maximum leverage ratio increase to 15.72x - meaning that you can leverage up an extra 4.72x at no extra liquidation risk!
The higher the $LUSD price is, the more attractive it becomes for Trove owners who are long ETH to scale up their position π§
Along with leveraging up on their ETH, users can:
1) Pocket the premium & sell their $LUSD 2) Take their $LUSD and enter the game of @ChickenBonds !
π£ The shenanigans of CeFi may cause some weariness, but the builders in DeFi Land keep chugging along π
A quick 𧡠on all the exciting new possibilities in DeFi involving Liquity & our DeFi frens over the past few weeks that you don't want to miss π₯ π
1/ @StargateFinance now supports LUSD transfers between selected chains (@optimismFND and Ethereum). They also have STG rewards up for grabs for LPs π