From d3a459cb1cde39124eef5ca8d9028fb404ba2d3b Mon Sep 17 00:00:00 2001
From: "motherofbots.eth" <126850716+osiris137@users.noreply.github.com>
Date: Tue, 14 Mar 2023 13:51:06 -0700
Subject: [PATCH] add notes on lusd and stability pool
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MEV_and_trading/stablecoins/LUSD.md | 25 +++++++++++++++++++++++++
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create mode 100644 MEV_and_trading/stablecoins/LUSD.md
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+## LUSD
+
+
+
+### tl; dr
+
+* issued by [liquity protocol](https://twitter.com/LiquityProtocol), $LUSD has zero governance, fully decentralized collateral, instant liquidation, lower liquidity level than $DAI, and no loss to holders since launch.
+* **redemption**: $LUSD uses CDP model where 1 $LUSD is minted via deposit of at least $1.1 worth of $ETH, so that 1 $LUSD is always backed by > $$1.1 worth of $ETH
+ - during arbs, $LUSD received will pay back the debt of troves with the lowest collateral ratio (CR)
+ - troves with low CR's are incentivized to improve CR (either top-up their collateral or repay loans)
+ - redemption reduces debtors' $ETH exposure, and the fee makes it unattractive for arb
+* **stability pool**: pooling a $LUSD reservoir for instant liquidation of troves with low CR. those depositing $LUSD into it become liquidators, and profit from liquation is ~10%.
+ - $LUSD premium in times of market turmoil.
+ - like DCA into $ETH at prices lower than usual by buying liquidations. e.g., provide $LUSD into the stability pool.
+* **redistribution**: in case there is 0 $LUSD left in the stability pool, the system redistributes both the debt and collateral from liquidated troves to all other existing troves, based on a portion of collateral of each trove vs. total collateral of all troves.
+ - retribution causes individual troves' CR to decrease and be more prone to liquidation (but for each 1 $LUSD they can get > $1 $ETH).
+ - buy the dip of $ETH: deposit $ETH into the stability pool when 1) $ETH market price is ~ prices troves are liquidated, or 2) when TCR is almost < 150%.
+
+
+
+
+
+---
+
+### resources