LUSD is an [ERC-20](https://coinmarketcap.com/alexandria/glossary/erc-20) token issued on the [Ethereum](https://coinmarketcap.com/currencies/ethereum/) blockchain, which is secured through the [Proof-of-Stake](https://coinmarketcap.com/alexandria/glossary/proof-of-stake-pos) (PoS) [consensus mechanism](https://coinmarketcap.com/alexandria/glossary/consensus-mechanism). Validators stake 32 ETH to participate in consensus and validating transactions.

At the time of writing, the current circulating supply of LUSD is 92,482,286.

Liquity protocol provides interest-free borrowing. To maintain stability, the protocol features one-time borrowing and withdrawal fees that adjust automatically based on when withdrawals occur. For instance, if there are more frequent withdrawals, then the borrowing fee will rise to discourage people from taking out loans. Rather than implementing variable interest rates to control borrowing dynamics as other systems such as [MakerDAO](https://coinmarketcap.com/alexandria/glossary/maker-protocol-makerdao), Liquity [leverages](https://coinmarketcap.com/alexandria/glossary/leverage) a decentralized and direct feedback mechanism via one-off fees. This approach allows borrowers to be aware of the changes in cost upfront while avoiding complicated governance procedures that would otherwise be necessary.

As laid out in its official documentation, Liquity is a 'non-custodial, immutable, and governance-free’ protocol, and the primary motivation behind creating it is to develop a decentralized and capital-efficient way to borrow stablecoins. With Liquity protocol, users can access interest-free loans that require less collateral than other borrowing systems. Instead of having to liquidate your Ether for cash, the Liquity protocol allows you to lock up your Ether and borrow against it to withdraw LUSD, with the opportunity to repay this loan at a later date. It is also possible to use the LUSD coin as collateral when borrowing Ether, then sell it on the open market to purchase more Ether — a cyclical process that can be repeated multiple times. Users can also earn LQTY by depositing LUSD in the stability pool, facilitating the Stability pool through their frontend (Liquity Protocol does not have a frontend, external frontend operators provide access to end-users), and providing liquidity to the LUSD:ETH Uniswap pool.

Robert Lauko is the founder and Head of Research at Liquity. He has a background in traditional finance and researching algorithms, network monitoring, and scalability issues. Rick Pardoe is the co-founder and Lead Engineer at Liquity. He holds degrees in Physics and Economics. Michael Svoboda is the current CEO at Liquity. He was previously CEO and COO at several blockchain companies, and holds a degree in computer science and economics.

Liquity USD (LUSD) is a USD-pegged stablecoin used to pay out loans on the Liquity protocol. At any time it can be redeemed against the underlying collateral at face value. To borrow, you must open a Trove and deposit a certain amount of [Ethereum](https://coinmarketcap.com/currencies/ethereum/) (ETH) as collateral, and can then draw LUSD up to a collateral ratio of 110%. Liquity protocol is a [decentralized](https://coinmarketcap.com/alexandria/glossary/decentralized) protocol that provides users with [interest](https://coinmarketcap.com/alexandria/glossary/interest-rates)-free loans, secured by Ether [collateral](https://coinmarketcap.com/alexandria/glossary/collateral). To guarantee the loans, Liquity has created a Stability [Pool](https://coinmarketcap.com/alexandria/glossary/liquidity-pool) with LUSD and borrowers act as guarantors for any remaining debt. At the time of writing, [total value locked](https://coinmarketcap.com/alexandria/glossary/total-value-locked-tvl) (TVL) on the protocol is over $642 million.