. @SiloFinance 🤝 LUSD

x.com

LUSD depeg, 10M+ Redemptions and more: A Recap In the previous week, LUSD consistently hovered below its peg, fluctuating between $0.992 and $0.996. However, the redemption mechanism prevented it from dropping any further. It enables arbitrageurs to exchange LUSD, valued at $1, for ETH, resulting in immediate profits. And arbitraging they were… /LiquityProtocol/status/1694058367394664486/photo/1 Here are a few statistics from August 10th to 20th: - A total of 13.2 million LUSD were redeemed - There were 72 redemptions across 87 Troves - The biggest redemption was 1.52m - Min and max redeemed Trove CR% were 117% and 147% Contrary to liquidations, redemptions do not cause any loss for the user. Over time, depending on ETH price movement, they can result in a loss or gain, depending on buy-back time. Interestingly, because ETH dropped in price a few days after the redemptions started many redeemed Troves ended up profitable! The avg redemption price was $1,811. That had also another positive effect: despite the quick ETH price drop, Liquity experienced zero liquidations! If you look at the chart below, the last liquidation was back on July 26th; redemptions ended up protecting users from losing money! /LiquityProtocol/status/1694058367394664486/photo/2 But what caused this situation in the first place? Liquity community member @0xdeif highlighted the issue, explaining that liquidity pools had been depleted of DAI, rendering them imbalanced. This phenomenon affected not only the LUSD Curve pool but also other stablecoins like FRAX. Read more on Deif's analysis here: /0xdeif/status/1689587325838258176?s=20 👇 So what about the peg? The depegging wasn't particularly severe. But as LUSD tends to stay slightly above the peg, it raised concerns among a few users. The price never dropped more than 0.8% below peg as bots swiftly corrected any deviations /LiquityProtocol/status/1694058367394664486/photo/3 But why was it not immediately arbed back to $1.00? The answer lies in the mechanics of redemptions. When a user initiates a redemption, a fee of at least 0.5% is charged. These fees scale with the redemption size—larger redemptions entail higher fees. Arbitrageurs had to wait for the fee to decay before being able to make profitable redemptions again. This mechanism discouraged excessively large redemptions, which would unnecessary impact other users' Troves. Moreover, these fees, combined with standard borrowing fees, generated revenue for LQTY stakers. A total of over $120k in fees was distributed during those ten days, paid out in ETH and LUSD. 👇 LUSD as a treasury asset A desirable treasury asset as it is, LUSD is known to be trending above peg. Taking advantage of that opportunity, DAO’s and users alike market-bought it, diversifying their holdings. Shining examples of that are @GearboxProtocol with $1.8m and @SiloFinance with a $1m buy. 👇 And what have we learned? That Liquity has been working exactly as intended for 868 days by now. The re-pegging process played out exactly as anticipated, and in line with the designs developed almost 4 years ago. Immutable, resilient, governed only by code.

gm 🫡 We're leveraging @LiquityProtocol 's $LUSD stablecoin for our Peg Stability Module (PSM). To discuss the integration at length & beyond, we're thrilled to announce an AMA with our frens over at Liquity! 🤝 🗓️ Aug 23rd 📍 Twitter Space: /i/spaces/1PlKQpMopanxE 🕰️ 4pm UTC

We are live

We'll be going live in an hour 👇📢

Is @LiquityProtocol v2 Solving the Stablecoin Trilemma through Delta Neutrality? This 🧵 will cover the key concepts of v2 which enables a decentralized reserve-backed, delta-neutral hedged stablecoin. TLDR: • Abandon CDP and adopt reserve backing mechanism with 1:1 minting…

x.com

Missed our recent thread on oracles in DeFI, and our plans around v2? 📢🔮 Check out our blog post, which covers it all 👇

Low-latency oracles and the contingencies for v2

SPACES alert 🚨 Join us for a DEEP dive on oracles tomorrow 🔮 We'll be joined by key contributors from @PythNetwork & @redstone_defi RSVP here: /i/spaces/1OwGWwXagzDGQ?s=20