Wednesday, May 22, 2024

LUSD Briefly Spikes to $1.03 After Trading Below Peg Since July

Liquity’s stablecoin has seen its market capitalization dwindle by half in the past six months as investors seek higher DeFi yields.

LUSD, an Ethereum-based stablecoin, jumped to $1.03 this week after trading slightly below its intended dollar peg since July.

LUSD's one month price action chart
LUSD’s one month price action

Sam Lekhak, head of growth at issuer Liquity, told The Defiant that a likely reason for the rally is a wealthy investor paying off $20M in LUSD-denominated debt since Jan. 5. He added that the borrower bought LUSD through DEX aggregators to pay back the loans, leading to its increase in price.

The trades were routed through Curve Finance, a leading DeFi exchange which regularly processes over $1B in volume per week — the biggest LUSD pool saw its reserves of the stablecoin nearly depleted this week, according to a Dune Analytics dashboard.