Crypto Gloss

LUSD

LUSD is the dollar-pegged stablecoin issued by Liquity V1, an immutable Ethereum borrowing protocol. A user can borrow LUSD against ETH in a Trove with no ongoing interest, but the protocol can charge a one-time borrowing fee and a variable redemption fee. Liquity V2’s BOLD stablecoin is a separate system with different collateral and rate rules; it did not rename or replace LUSD.

Market Snapshot: LUSD

Metric Value
Ticker LUSD
Price $1.00
Market Cap $25.796 million
24-Hour Change -0.20%
24-Hour Volume $101,037
Circulating / Total Supply 25.729 million

CoinGecko page snapshot: 2026-10-20. Live values can change; this is not investment advice.

Tokenomics and supply

LUSD has no fixed maximum supply. In Liquity V1, borrowers create it by drawing a loan against ETH collateral; repaying debt burns LUSD, and redemptions also burn LUSD while transferring ETH collateral to the redeemer. Liquidations can burn LUSD from the Stability Pool to cancel debt. The amount in circulation therefore changes with borrowing, repayments, redemptions, and liquidations rather than following a preset emission schedule.

LQTY is a separate secondary token used for Liquity V1 incentives and fee-related participation; it is not LUSD and does not turn LUSD into a governance token. BOLD is Liquity V2’s distinct stablecoin, with separate markets and user-set borrowing rates. CoinGecko’s current supply figure is a market-data snapshot, not a guarantee of collateral available to any one holder.

Redemptions, liquidations, and the peg

Liquity V1 lets users redeem LUSD for the dollar-equivalent value of ETH through the protocol’s redemption mechanism. That is not the same as an issuer paying a user one U.S. dollar in bank funds. Redemption fees vary with protocol activity. The system’s minimum individual collateral ratio is 110%; Troves below the threshold can be liquidated, with the Stability Pool acting as the first line of defense by using deposited LUSD to repay debt and receiving ETH collateral in return.

These mechanisms create incentives that can help keep LUSD near one dollar, but they do not guarantee a fixed exchange price in every market. ETH price shocks, oracle or smart-contract problems, low Stability Pool liquidity, network congestion, and exchange liquidity can all affect users. Depositing LUSD into the Stability Pool exposes the depositor to liquidation and collateral-price outcomes; it is not a risk-free savings account.

Liquity V1 and V2 are different systems

Liquity’s current documentation says V1 and LUSD remain available for users who prefer a stablecoin backed only by ETH. Liquity V1 is immutable and has no ordinary governance process for changing its core contracts. That reduces some administrator-change risks, but it also means that a serious design flaw or dependency problem cannot be fixed through a routine upgrade.

Liquity V2 issues BOLD, not a new version of LUSD. V2 supports multiple collateral branches, user-selected borrowing rates, and separate Stability Pools, while V1 keeps its own contracts and LUSD supply. Comparisons should name the version: a BOLD feature or metric should not be attributed to LUSD, and an old LUSD supply estimate should not be presented as Liquity’s current total stablecoin supply.

Social Media Sentiment

A January 2026 r/ethereum discussion about Liquity V2 included support for its immutable design and criticism that delegated rates can change borrowers’ costs. The thread is mainly about V2 and BOLD, not a direct poll of LUSD holders; it illustrates a design trade-off rather than representative community consensus. Read the referenced Reddit discussion.

Last updated: 2026-10

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