Liquity USD (LUSD): What It Is, Uses and Risks

Liquity USD (LUSD) is a stablecoin meant to stay close to one US dollar. It is issued by the Liquity Protocol, a decentralized borrowing system on Ethereum-compatible networks. Users lock ether (ETH) as collateral and borrow LUSD, paying no ongoing interest on the loan. The protocol requires a minimum collateral ratio of 110%, meaning a borrower's collateral must be worth at least 110% of the LUSD they owe. Liquity describes itself as non-custodial, immutable and governance-free. No company holds users' funds, the core contracts cannot be changed by an administrator, and there is no token vote that controls the system. Because LUSD is backed by over-collateralized ether loans rather than cash in a bank, its value depends on the ether held as collateral and on the mechanisms that keep the price near one dollar.

LUSD is mainly used as a dollar-denominated unit inside crypto markets. Borrowers take it out against ether collateral, which lets them access dollar liquidity without selling their ether. Holders can also keep it as a stable store of value or use it in decentralized finance applications that accept it, such as trading pools and lending markets. Liquity's design includes a Stability Pool, where depositors hold LUSD to absorb the debt of loans that fall below the required collateral level. Depositors in that pool receive a share of the liberated collateral in return. A redemption feature also lets holders exchange LUSD for the underlying ether at face value, which gives arbitrage traders a reason to push the market price back toward one dollar when it drifts. The public materials describe LUSD as fully redeemable, and that feature is central to its peg. Readers should understand these mechanisms before relying on any stablecoin for everyday payments or savings.

The figures below come from the token data supplied for this page and are approximate, as of 2026-11-05. LUSD traded at about $1.02, with a market capitalization of roughly $24.0 million and a market cap rank of 747. Trading volume over the previous 24 hours was about $62,700, which is small relative to the largest stablecoins. The circulating supply and total supply are both about 23.5 million tokens, and the data lists no maximum supply. Over the past seven days the price rose about 2.1%, and over the past year it rose about 2.4%. The all-time high was about $1.59 on 2026-08-19, and the all-time low was about $0.897 on 2022-01-27. Those two extremes are far apart for a stablecoin, which is a reminder that a stablecoin can drift from its peg during stress. These numbers change constantly, so check a live market data page before drawing any conclusion. This page does not predict future prices and gives no buy or sell advice.

LUSD is issued on Ethereum, Arbitrum, Optimism, zkSync Era, Base and Polygon. Each of these is a separate network, and a version of LUSD on one network does not automatically move to another. Moving tokens between networks usually requires a bridge or a specific transfer service, and bridges carry their own technical and security risks. The token is not the native asset of any of these chains. Ether remains the base asset of Ethereum and the collateral used in Liquity loans, while the networks listed here are where LUSD is minted, traded and used. Before sending LUSD, confirm that the sending and receiving addresses are on the same network. Sending tokens on the wrong network is one of the most common ways users lose funds, and many transfers cannot be reversed. Using a network's official documentation to confirm contract addresses is a sensible habit for any token that exists on several chains.

LUSD carries several risks. The first is peg risk. The price can move away from one dollar if redemptions slow, if ether collateral falls sharply, or if market confidence weakens. The all-time low in the data shows that the token has traded well below one dollar in the past. The second is smart contract risk. Liquity's contracts are described as immutable, so a bug cannot be fixed by an administrator in the usual way, and any flaw could affect the funds in the system. The third is collateral risk, since loans depend on ether prices and on the health of the Stability Pool. The fourth is bridge and network risk when LUSD is moved between chains. For storage, a self-custody wallet that supports the relevant networks gives the holder control of the private keys, but it also puts the responsibility for backups and phishing protection on the user. Never share a seed phrase or private key, and be cautious about unsolicited messages and fake token contracts. Readers who want to use LUSD in lending or trading should also check the age and legal requirements in their area. Anyone using online gambling or prediction services with crypto must be 18 or older, or 21 where required, and should confirm those services are legal where they live.