LUSD, issued by the Liquity Protocol smart contracts under a governance-free, immutable model with no admin key, is a crypto-collateralized stablecoin that is soft-pegged to one U.S. dollar (USD) and minted against Ether collateral [S1][S2].

Holders receive a bearer token price-tracking to 1 USD, maintained through redemption arbitrage against the underlying Ether (ETH) collateral [S1]. The stablecoin is non-rebasing and carries no interest on outstanding loans for borrowers [S1]. Fees borne when minting LUSD comprise a one-time borrowing fee of 0.5% to 5% of drawn LUSD, while redeemers pay a redemption fee on ETH subject to a 0.5% minimum [S1].

The protocol software was developed and published by Liquity AG, Dufourstrasse 43, 8008 Zurich, Switzerland, which states it is not the operator of, and does not control, any version of the Liquity Protocol; the token is issued by the protocol's smart contracts, not by a single corporate entity [S2][S3]. LUSD does not represent any ownership right, stake, share, or security, and confers no claim toward any legal entity [S2]. No eligibility gate is disclosed; the protocol is permissionless [S2]. LUSD can at any time be redeemed against the underlying collateral at face value [S1]. Collateral is held non-custodially in immutable smart contracts under user control [S2].

LUSD is an Ethereum token issued by immutable smart contracts that run on the Ethereum network [S2]. Minting occurs when a user opens a Trove, deposits ETH and draws LUSD at a 110% minimum collateralization ratio per position [S1]. Redemption swaps LUSD for ETH at 1 USD face value, with all minting, redemption, and settlement processed onchain and immediately [S1][S4].

<Sources
  retrievedAt="2026-06-21"
  items={[
    { id: "S1", url: "https://docs.liquity.org/liquity-v1/faq/general" },
    { id: "S2", url: "https://www.liquity.org/protocol-disclaimer" },
    { id: "S3", url: "https://www.liquity.org/" },
    { id: "S4", url: "https://docs.liquity.org/v2-faq/redemptions-and-delegation" },
  ]}
/>


# Asset off peg methodology

## 1. Overview

The asset off peg metric is defined as the percentage deviation of a tokenized asset's daily closing market price from its designated reference (pegged) asset price. This metric is utilized to assess the stability and peg-keeping performance of stablecoins, wrapped assets, and other pegged tokens. The deviation is calculated relative to the reference price, representing either a premium or a discount in the market. Daily tracking of this metric is performed to enable the monitoring of peg stability and the identification of potential de-pegging events across various asset classes.

## 2. Data sources

- **EVM chain events**: `AnswerUpdated` events from Chainlink aggregator contracts, covering EVM-compatible chains (Ethereum, Polygon, and others)
- **Asset metadata**: Reference asset configurations and token mappings
- **External data**: End-of-day price feeds for tokenized assets

## 3. Step-by-step calculation

### Component A: Retrieve asset prices and reference mappings

- **Purpose**: Identify the daily closing price of each asset and map it to its designated reference currency
- **Logic**: Daily closing prices for each asset are retrieved from end-of-day price feeds. Each asset is mapped to its designated reference currency (such as the U.S. Dollar, Euro, or British Pound) using asset metadata. For assets pegged to the U.S. Dollar, a fixed reference rate of 1.0 is assigned. For assets pegged to other fiat currencies, the corresponding Chainlink FX feed is identified.
- **Key fields**: `asset_price` (daily closing price of the asset), `reference_asset` (the target peg currency), `fx_feed_name` (the identifier for the Chainlink FX feed)

### Component B: Resolve daily reference prices

- **Purpose**: Determine the daily USD value of the reference peg currency
- **Logic**: Daily FX rates are extracted from Chainlink oracle price feeds on EVM-compatible chains. To account for days without oracle updates, the last recorded rate for each FX feed is carried forward to construct a continuous daily time series. The daily reference price is then established by matching the asset's mapped FX feed or fixed rate with the corresponding daily rate.
- **Key fields**: `price` (the FX rate from the oracle feed), `timestamp` (the date of the rate), `reference_price` (the resolved daily reference price in USD)

### Component C: Calculate peg deviation

- **Purpose**: Compute the final percentage deviation of the asset price from its reference price
- **Logic**: The daily asset price and the resolved daily reference price are aligned by timestamp and asset identifier. The percentage deviation is calculated by subtracting the reference price from the asset price, and dividing the result by the reference price. Days where a reference price cannot be resolved are excluded from the final dataset.
- **Key fields**: `asset_off_peg` (the percentage deviation from the peg), `timestamp` (the daily grain timestamp)

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

(market_price - reference_price) / reference_price

Percentage deviation of the asset price from its reference peg.

Asset off peg

Stablecoins

Overcollateralized borrowers deposit funds into Liquity and receive LUSD stablecoin.

Liquity is a non-custodial stablecoin protocol built on Ethereum. Liquity was founded by Robert Lauko & Rick Pardoe and launched in 2020.

LQTY tokenholders own & govern the protocol. They currently take all of the total borrow & redemption fees paid by borrowers (revenue). Liquity’s investors include Lemniscap, Polychain, Alameda Research, etc.

github

twitter

discord

etherscan

website

Stablecoin issuers

Liquity

Liquity USD (LUSD) is a U.S. dollar stablecoin issued by Liquity.

Holders can mint and redeem directly with Liquity in ETH, and holders have a contractual right to redeem at par.

LUSD has been issued on Ethereum as an ERC-20 token since April 2021.

Liquity USDLUSD