Owning LUSD: Uses, Storage and Risks

LUSD is a dollar-pegged stablecoin issued by the Liquity Protocol. The protocol pays out LUSD when eligible borrowers take loans against Ether (ETH); the stated minimum collateral ratio is 110%. Liquity describes these loans as having 0% interest, though borrowing can still involve protocol fees or other costs, so check the terms before using it.

As a holder, you can keep LUSD on-chain, transfer it, or use it in applications that accept the token. The protocol also allows LUSD to be redeemed for ETH, but that mechanism does not guarantee you can sell LUSD for exactly one dollar on every exchange or at every moment. The market price can move away from its peg.

Liquity describes its protocol as non-custodial, immutable and governance-free. Those properties do not remove the risks of using a smart contract or holding a stablecoin. LUSD is not a bank deposit, and its dollar peg is not a promise of cash held in a bank account.

LUSD is issued on Ethereum, Arbitrum, Optimism, zkSync Era, Base and Polygon. It is not the native gas token of these networks; you need the network’s own gas token to pay transaction fees. A transaction on one network will not automatically move your LUSD to another.

Use a wallet that supports the network where your LUSD is held, and check the token contract address against Liquity’s official project information before adding or transferring a token. Similar names and symbols can be used by unrelated or counterfeit tokens. If you move LUSD between networks, check which bridge or transfer route you are using, its fees, and whether the receiving application accepts that version of the token.

Before sending a large amount, consider a small test transfer. Confirm the selected network and destination address, and make sure you can access the wallet’s recovery phrase or backup. A transaction sent to the wrong network or address may be difficult or impossible to recover.

LUSD’s supply is not capped at a published maximum. As of 2026-11-08, circulating and total supply were both about 23.84 million LUSD. Borrowers draw LUSD from the protocol, and repayments or redemptions can affect how many tokens remain in circulation; supply can change over time.

On 2026-11-08, LUSD traded at about $1.022, above its intended dollar peg. Its reported 24-hour trading volume was about $13,155 on that date. These are dated market figures, not a guaranteed price or a measure of how much you can sell at once. Liquidity can differ by exchange and network, and a thin market can make larger trades harder to execute near the displayed price.

If you need a stable value for a near-term payment, check the live price and available trading depth on the exact network or venue you plan to use. Do not assume that a dollar peg means LUSD will always be worth exactly one dollar.

Keep LUSD in a wallet that supports its network and gives you control of the private keys, or use a reputable custody provider if you prefer someone else to manage them. Self-custody means you are responsible for safeguarding your recovery phrase: anyone who obtains it can take the assets, and losing it may leave you unable to recover them. Never share it or enter it into an unsolicited site or message.

For longer-term storage, keep your backup offline and away from cameras, cloud notes and shared devices. Check the wallet address and network carefully before signing a transaction. Be cautious with wallet prompts that request token approvals or ask you to connect to an unfamiliar application; an approval can allow a contract to move tokens from your wallet.

If you use an exchange or custodian, you depend on that provider to secure and release your assets. Check its withdrawal rules and supported LUSD network before depositing. A deposit to an unsupported network may not be recoverable.

LUSD has several distinct risks. Its market price can fall below or rise above one dollar, and the protocol’s redemption mechanism does not ensure that every holder can sell at the peg through an exchange. Trading liquidity may also be limited, particularly for a large order or on a less active network.

The collateral system creates risks for borrowers and can affect the wider protocol. ETH price falls can push a borrower’s collateral ratio toward liquidation; the stated minimum is 110%. The Stability Pool and other borrowers provide additional backstops, but they do not make losses or protocol failure impossible. A smart-contract flaw, network disruption, or failure in a bridge or application you use could also put funds at risk.

Before holding or using LUSD, decide whether you can tolerate a loss, check the network and contract, and avoid relying on it for money you cannot afford to have temporarily inaccessible. A stablecoin label is not a guarantee of stable value or recoverable funds.