[ARFC] Add LUSD to Aave v3 on Arbitrum

title: Add LUSD Arbitrum v3
author: @Llama - @TokenLogic
created: 2023-04-23


This publication presents the community with the opportunity to add LUSD to Aave Arbitrum v3.


LUSD is decentralised stable coin backed by ETH that is minted on the non-custodial, immutable, and governance-free, Liquidity Protocol.

Adding LUSD to Arbitrum will promote stable coin diversity. All Liquidity Protocol contracts are immutable, which makes LUSD the most trustless stablecoin available.

This publication proposes listing LUSD with collateral disabled (LTV 0%) with borrowing enabled.


LUSD is currently listed on the following Aave deployments:

  • Ethereum v3
  • Ethereum v2
  • Optimism v3

This publication seeks to list LUSD on Aave v3 Arbitrum.

Past publications, here and here provide insight and context.

LUSD brings more stable coin diversity to the Aave Protocol and will further empower the support for decentralized stablecoins. The LUSD stable coin mechanism is relatively simple and is in line with the risk averse ethos of the Aave Community.

LUSD is overcollateralised by ETH with two main mechanisms helping it keep its peg:

  • LUSD can be redeemed for ETH at face value (i.e., 1 LUSD for $1 of ETH).
  • Minimal collateral ratio of 110%.

Both mechanisms respectively create a price floor and ceiling through arbitrage opportunities.

LUSD on Arbitrum and Optimism relies on users transferring LUSD through each networks respective bridge to arbitrage the price variation across the networks.

This proposal aims to add LUSD as a borrowable asset (LTV 0%).

Chainlink Oracle LUSD/USD 0x0411D28c94d85A36bC72Cb0f875dfA8371D8fFfF


Ticker: LUSD

Contract Address: 0x93b346b6BC2548dA6A1E7d98E9a421B42541425b

Parameter Value
Isolation Mode No
Borrowable Yes
Collateral Enabled No
Supply Cap 900,000 units
Borrow Cap 900,000 units
Debt Ceiling 0
Liquidation Bonus NA
Liquidation Protocol Fee NA
Variable Base 0.00%
Variable Slope1 4.00%
Variable Slope2 87.00%
Uoptimal 80.00
Reserve Factor 10.00%
Stable Borrowing Disabled
Stable Slope1 4.00%
Stable Slope2 87.00%
Base Stable Rate Offset 1.00%
Stable Rate Excess Offset 8.00%
Optimal Stable To Total Debt Ratio 20.00%


@llamaxyz and contributor, @TokenLogic, are not associated with or compensated by Liquity for publishing this AFRC.


Copyright and related rights waived via CC0.


Would love to hear the opinion of @ChaosLabs regarding the parameters.

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With LUSD being proposed to be listed as a non-collateral asset, Chaos Labs supports the listing with the proposed supply and borrow caps.


Per Gauntlet’s supply and borrow cap methodology, we would recommend an initial borrow and supply cap of 900,000 tokens.

Hi Everyone,

We have creates a Snapshot that will start on Monday 15th May and extend to Friday 19th May which uses the Supply Cap and Borrow Cap of 900,000 as mentioned by @Gauntlet above.


Thank you in advance to all those that participate in the vote.

Hi Everyone :wave:

Based upon the vote being very one sided and occurring over the weekend, @Llamaxyz will resubmit this proposal for voting and reach out to various delegate teams to raise awareness.

Screenshot 2023-06-13 at 14.35.18

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