Liquity’s LQTY token surges over 130% as USDC stablecoin loses peg

The recent market instability surrounding the USDC stablecoin and the closure of three cryptocurrency-friendly banks has led to a surge in the value of Liquity’s LQTY token.

LQTY is a secondary token of Liquity, a decentralized lending platform that allows users to collateralize ETH and borrow the stablecoin LUSD. The USDC peg loss has forced users to shift to other stablecoins to avoid risks, and Liquity’s LUSD stablecoin has capitalized on this, leading to an increase in user adoption of the platform.

LQTY / USDT 1 Day Chart by TradingView

According to Andrew Thurman, Head of Research at Nansen, Liquity’s LUSD stablecoin has gained significant attention in the market during the USDC peg loss crisis, and this has led some investors to switch to the Liquity platform. Since March 6, Liquity has recorded a 10% increase in the number of wallets holding LUSD, according to data from Nansen.

As a result, the value of LQTY has skyrocketed, surged more than 130% since March 10, gaining 340% within a span of 30 days, and reaching an all-time high of $3.85. Currently, LQTY is trading at around $3 with a market capitalization of $293.9 million, according to CoinGecko.

LQTY generates revenue from fees created by the Liquity protocol, which is used to incentivize early users. Rather than charging fluctuating interest rates for borrowing, Liquity charges a one-time fee for users, and its interest rate is fixed at 0%. The total supply of LQTY is limited to 100 million tokens.

According to Etherscan, over 49 million LQTY tokens worth approximately $153 million have been staked, representing around 52% of the total supply of LQTY. Liquity’s TVL has reached $679.5 million, according to DeFiLlama data. Dune Analysis data shows that the project has generated revenue of $30.9 million and has lent approximately 4.48 billion LUSD over its operating period.

In addition, as reported by AZCoin News, LQTY has benefited from Binance’s recent efforts to access new stablecoin projects such as TUSD and LUSD at the end of February. During this time, Paxos, the company behind BUSD, was required by the New York Department of Financial Services (NYDFS) to stop minting BUSD.

Binance has opened trading for LQTY/BTC and LQTY/USDT pairs since February 28. Currently, this top trading platform owns around 11.57% of LQTY’s total supply, according to Nansen.

Overall, the market turbulence surrounding USDC and the closure of cryptocurrency-friendly banks have boosted Liquity’s LQTY token’s value. The platform’s adoption rate has risen as a result of its LUSD stablecoin’s performance during this crisis. With the growing number of users and the platform’s significant TVL, LQTY could be a token to watch in the coming months.

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