{
  "$schema": "https://degreesofsatoshi.com/encyclopedia/schemas/article-v1.json",
  "schemaVersion": "1.0.0",
  "id": "what-is-lusd",
  "canonical": "https://degreesofsatoshi.com/encyclopedia/what-is-lusd/",
  "collection": "stablecoins",
  "title": "What is LUSD? Liquity V1’s stablecoin",
  "description": "Learn how Liquity V1 creates LUSD against ETH and why protocol redemption for collateral differs from repaying your own loan or receiving bank dollars.",
  "aliases": [
    "what is lusd",
    "What is LUSD Liquity V1’s stablecoin"
  ],
  "dates": {
    "published": "2026-10-02",
    "modified": "2026-10-02",
    "verified": "2026-10-02T19:26:58.461Z",
    "dataAsOf": "2026-10-02"
  },
  "authorship": {
    "publisher": "Degrees of Satoshi editorial project",
    "process": "AI-assisted research and drafting with a separate automated source-verification pass; no external expert or named human review is implied."
  },
  "quickAnswer": {
    "text": "LUSD is the stablecoin of Liquity V1, created by borrowing against ETH collateral. It targets a dollar value through the protocol’s collateral and redemption mechanisms. LUSD redemption exchanges tokens for a dollar-equivalent amount of ETH under protocol rules and fees; it is not a promise of a bank-dollar payout and is different from repaying your own Trove.",
    "claimId": "what-is-lusd-quick-answer",
    "sourceIds": [
      "x425-sc-lusd",
      "x425-sc-lusd-redemption"
    ]
  },
  "keyFacts": [
    {
      "label": "Version",
      "value": "LUSD belongs to Liquity V1; BOLD belongs to V2.",
      "sourceIds": [
        "x425-sc-bold"
      ],
      "id": "version",
      "claimId": "what-is-lusd-fact-version"
    },
    {
      "label": "Collateral",
      "value": "V1 borrowing uses ETH in positions called Troves.",
      "sourceIds": [
        "x425-sc-lusd"
      ],
      "id": "collateral",
      "claimId": "what-is-lusd-fact-collateral"
    },
    {
      "label": "Redemption",
      "value": "LUSD can be exchanged for ETH at protocol face value, less applicable fees.",
      "sourceIds": [
        "x425-sc-lusd-redemption"
      ],
      "id": "redemption",
      "claimId": "what-is-lusd-fact-redemption"
    }
  ],
  "prerequisites": [
    "crypto-backed-stablecoins"
  ],
  "sections": [
    {
      "id": "trove",
      "heading": "A Trove records collateral and debt",
      "sourceIds": [
        "x425-sc-lusd"
      ],
      "paragraphs": [
        "A borrower deposits ETH and obtains LUSD under V1’s rules. The position must meet its collateral requirements and can face liquidation if it becomes unsafe. Another person buying LUSD on a DEX does not acquire the borrower’s Trove.",
        "The description “interest-free” in V1 documentation should not be read as “cost-free.” Borrowing and redemption fees, network costs and liquidation exposure are separate considerations."
      ]
    },
    {
      "id": "redeem",
      "heading": "Redemption is not your own repayment",
      "sourceIds": [
        "x425-sc-lusd-redemption"
      ],
      "paragraphs": [
        "A holder can redeem LUSD through the protocol for ETH valued at the specified face-value convention, after applicable fees. The process affects eligible Troves according to protocol ordering. It does not require the redeemer to be the original borrower.",
        "Illustrative arithmetic: before fees, 100 LUSD at a protocol ETH price of $2,000 corresponds to 0.05 ETH. The holder receives collateral exposure, not 100 dollars in a bank account."
      ]
    },
    {
      "id": "repay",
      "heading": "Closing a loan follows a different path",
      "sourceIds": [
        "x425-sc-lusd",
        "x425-sc-lusd-redemption"
      ],
      "paragraphs": [
        "Repaying your own Trove’s debt releases your collateral under the closing rules. That is distinct from initiating a general LUSD redemption against the protocol’s Troves. Confusing the two can lead a borrower to choose the wrong interface action.",
        "This entry describes Liquity V1 from documentation checked on 2 October 2026. Do not copy V2 interest or collateral assumptions into V1 merely because both share the Liquity name."
      ]
    }
  ],
  "faq": [
    {
      "question": "Did BOLD replace every LUSD token?",
      "answer": "No. Liquity’s V2 documentation distinguishes BOLD from the continuing V1 LUSD system. The token and protocol version must be identified before applying borrowing or redemption rules.",
      "sourceIds": [
        "x425-sc-bold",
        "x425-sc-lusd"
      ]
    }
  ],
  "claims": [
    {
      "id": "what-is-lusd-quick-answer",
      "articleSlug": "what-is-lusd",
      "statement": "LUSD is the stablecoin of Liquity V1, created by borrowing against ETH collateral. It targets a dollar value through the protocol’s collateral and redemption mechanisms. LUSD redemption exchanges tokens for a dollar-equivalent amount of ETH under protocol rules and fees; it is not a promise of a bank-dollar payout and is different from repaying your own Trove.",
      "sourceIds": [
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        "source-1620cdec6ce15ab3"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-fbefada66afa68c7",
          "locator": "Trove; collateral; fees; repayment"
        },
        {
          "sourceId": "source-1620cdec6ce15ab3",
          "locator": "Redemption versus repayment"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T19:26:58.461Z",
        "reviewer": "Independent automated verification — Codex DeFi agent, separate from the stablecoin drafting agent",
        "notes": "Liquity V1 ETH-only collateral, one-off fees and redemption versus repayment checked. 100/2,000 = 0.05 ETH; V1/V2 distinction retained."
      }
    },
    {
      "id": "what-is-lusd-fact-version",
      "articleSlug": "what-is-lusd",
      "statement": "Version: LUSD belongs to Liquity V1; BOLD belongs to V2.",
      "sourceIds": [
        "source-343f9861b9d0b4a3"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-343f9861b9d0b4a3",
          "locator": "Differences to V1; collateral; interest"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T19:26:58.461Z",
        "reviewer": "Independent automated verification — Codex DeFi agent, separate from the stablecoin drafting agent",
        "notes": "Liquity V1 ETH-only collateral, one-off fees and redemption versus repayment checked. 100/2,000 = 0.05 ETH; V1/V2 distinction retained."
      }
    },
    {
      "id": "what-is-lusd-fact-collateral",
      "articleSlug": "what-is-lusd",
      "statement": "Collateral: V1 borrowing uses ETH in positions called Troves.",
      "sourceIds": [
        "source-fbefada66afa68c7"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-fbefada66afa68c7",
          "locator": "Trove; collateral; fees; repayment"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T19:26:58.461Z",
        "reviewer": "Independent automated verification — Codex DeFi agent, separate from the stablecoin drafting agent",
        "notes": "Liquity V1 ETH-only collateral, one-off fees and redemption versus repayment checked. 100/2,000 = 0.05 ETH; V1/V2 distinction retained."
      }
    },
    {
      "id": "what-is-lusd-fact-redemption",
      "articleSlug": "what-is-lusd",
      "statement": "Redemption: LUSD can be exchanged for ETH at protocol face value, less applicable fees.",
      "sourceIds": [
        "source-1620cdec6ce15ab3"
      ],
      "sourceLocators": [
        {
          "sourceId": "source-1620cdec6ce15ab3",
          "locator": "Redemption versus repayment"
        }
      ],
      "scope": {
        "collection": "stablecoins",
        "dataAsOf": "2026-10-02",
        "blockHeight": null
      },
      "qualification": "",
      "evidenceStatus": "documented",
      "verification": {
        "status": "verified",
        "method": "independent automated source review",
        "checkedAt": "2026-10-02T19:26:58.461Z",
        "reviewer": "Independent automated verification — Codex DeFi agent, separate from the stablecoin drafting agent",
        "notes": "Liquity V1 ETH-only collateral, one-off fees and redemption versus repayment checked. 100/2,000 = 0.05 ETH; V1/V2 distinction retained."
      }
    }
  ],
  "sources": [
    {
      "id": "x425-sc-lusd",
      "label": "Liquity V1 borrowing",
      "publisher": "Liquity",
      "url": "https://docs.liquity.org/liquity-v1/faq/borrowing",
      "locator": "Trove; collateral; fees; repayment",
      "note": "ETH-backed V1 LUSD borrowing and fees, distinguished from V2.",
      "version": "Document retrieved 2026-10-02; content hash recorded",
      "checkedAt": "2026-10-02T18:51:09.300Z",
      "contentSha256": "750a6f3874a4871e799e5cf5c26993117885d8c4a542cbac49c0784b0f7766f5",
      "recordId": "source-fbefada66afa68c7"
    },
    {
      "id": "x425-sc-lusd-redemption",
      "label": "Liquity V1 redemptions",
      "publisher": "Liquity",
      "url": "https://docs.liquity.org/liquity-v1/faq/lusd-redemptions",
      "locator": "Redemption versus repayment",
      "note": "LUSD-to-ETH redemption at protocol face value, fees and borrower effects.",
      "version": "Document retrieved 2026-10-02; content hash recorded",
      "checkedAt": "2026-10-02T18:51:09.187Z",
      "contentSha256": "8224c9356801382af8a13ce766dc4acbd72456e9b44f47184cfc1ba205ff270d",
      "recordId": "source-1620cdec6ce15ab3"
    },
    {
      "id": "x425-sc-bold",
      "label": "Liquity V2 overview",
      "publisher": "Liquity",
      "url": "https://docs.liquity.org/v2-faq",
      "locator": "Differences to V1; collateral; interest",
      "note": "BOLD token, user-set borrowing rates and multiple collateral types.",
      "version": "Document retrieved 2026-10-02; content hash recorded",
      "checkedAt": "2026-10-02T18:51:09.526Z",
      "contentSha256": "6a89ad55847404c5a22857f64c60892e685fbb0e1905e5b369b048b24b00b8b2",
      "recordId": "source-343f9861b9d0b4a3"
    }
  ],
  "related": {
    "articles": [
      "what-is-bold",
      "stablecoin-redemption-arbitrage",
      "collateral-and-health-factors",
      "what-is-gho"
    ],
    "dossiers": [],
    "wallets": []
  },
  "revisionHistory": [
    {
      "date": "2026-10-02",
      "kind": "published",
      "summary": "First publication after primary-source research and separate automated verification."
    }
  ],
  "citation": "Degrees of Satoshi editorial project. “What is LUSD? Liquity V1’s stablecoin.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/what-is-lusd/"
}