Discussion about Ideas for LUSD Use Case Development
After reading TokenBrice’s article on multi-chain strategies, some thoughts emerged that centralized stablecoins have already penetrated into any corner of the DeFi system, but people are not aware of the related risks. After SEC stopped issuing new stablecoins for BUSD, I believe the same concerns have spread to USDC, even though USDC denies it, no one can guarantee that it will not face the same scrutiny.
We perceive the risk of a potential system (Defi) crash in the future, but we find that liquity provides a perfect alternative here. So we need to help LUSD grow and expand to protect our hard-earned Defi system. I believe some builders in the industry have been doing the same thing, such as: Stargate, Gearbox, Euler, etc. protocols are helping LUSD expand. With the expansion, our worrying mood gradually becomes cheerful.
L2 is a solution for the expansion of the eth network in the medium and long term. Through https://defillama.com/stablecoin/liquidity-usd, it can be seen that the main activity of LUSD is concentrated on the Optimism network, and with the supply rate on Velodrome If it weakens, the funds will decrease accordingly. Following the llama dashboard, we found that 13% of funds have flowed out of Optimism in the past 7 days. This reflects how to increase the liquidity supply rate of Lusd, which is the core of helping Lusd expand. The most eye-catching protocol that generates positive returns in the entire defi system is GMX. By analyzing the composition of GLP, we found that lusd can perfectly replace usdc. If a GMX-like protocol using LUSD as collateral is built on the Optimism network, will it greatly promote the expansion of LUSD? What difficulties will be encountered in the implementation process, and whether the idea is worth turning into reality, I am looking forward to the discussion and feedback from the community.