coindesk.com
LQTY, native token for decentralized borrowing protocol Liquity, has gained massive interest following the chaos from the depegging of the second largest stablecoin by market capitalization, Circle’s $USDC.
The price of LQTY, the secondary token for decentralized borrowing protocol Liquity, was up nearly 20% in the past 24 hours – placing it among the best-performing crypto assets for the period. Moreover, LQTY has soared nearly 500% since the start of the year and was trading around $3.33 at presstime.
The most recent price action came after investors balked at Circle’s $USDC stablecoin. The dollar-pegged crypto’s loss (whose weekend woes stemmed from $3.3 billion in then-inaccessible bank reserves) has been a win for Liquity, a decentralized platform for taking out loans denominated in protocol’s primary token, LUSD.
Liquity’s LUSD "clearly managed to take center stage during the $USDC depeg panic, and that’s likely caused some investors to take a second look at" LQTY, said Andrew Thurman, head of research for data company Nansen.
While LUSD is meant to retain its dollar-peg, Liquidity’s secondary token LUSD has seen the upside. LQTY, which has a total supply of 100 million and a market capitalization of $314 million, per CoinGecko, captures the fee revenue generated by the Liquity protocol, which are then paid out to stakers.
Data from Nansen shows a 10% jump in wallets holding the LUSD stablecoin since March 6, indicative of a new stablecoin narrative following the depegging of $USDC.
Liquity allows users to deposit ether (ETH) into the protocol as collateral and take out loans denominated in USD-pegged stablecoin LUSD. Instead of charging a variable interest rate for drawing loans, Liquity has a 0% interest rate, charging users a one-time fee.
With a total value locked (TVL) of $683 million, according to data aggregator DeFiLlama, Liquity has generated $30 million in lifetime revenue, and as of March 11, users have borrowed almost $4.5 billion LUSD, according to a dune dashboard created by a Liquity developer.
Currently, more than 52 million LQTY worth about $184 million has been staked, which represents 52% of the total supply of LQTY, per blockchain explorer Etherscan.
Binance, which opened up trading for spot trading pairs LQTY/BTC and LQTY/USDT on Feb. 28, currently owns roughly 11.57% of the total LQTY supply, data from blockchain analytics firm Nansen shows.