Stablecoin Lender Liquity’s Token Gains 80% in Month As Activity Increases

While most major cryptocurrencies languish in bear market, Stablecoin Lender Liquity’s Token Gains 80% in Month As Activity Increases
Stablecoin Lender Liquity’s Token Gains 80% in Month As Activity Increases
Stablecoin Lender Liquity’s Token Gains 80% in Month As Activity Increases

While the majority of the top cryptocurrencies sulk in the bear market , one coin has pulled off an impressive comeback. The price of Liquity’s LQTY token, a decentralized lending technology, has increased by 80% in the past month, reaching over $1.35.

Contrast this with popular crypto assets like Bitcoin and Ethereum, which registered modest single-digit gains during the same time period. The $120 million market cap LQTY has demonstrated extreme volatility, even falling 12% on Friday despite no noteworthy news.

Users can use Ethereum as collateral to borrow Liquity’s USD-pegged stablecoin LUSD. Analysts credit the rising usage and staking activity on the developing DeFi network for LQTY’s rise. Protocol fee incentives paid in LUSD and ETH totaled $625,000 in the last month for Liquity Stakers as a group. One way to profit from the network’s lending activities is by staking LQTY tokens.

The stablecoin monitoring firm Bluechip recently gave the platform a “A” rating. This seal of approval could encourage acceptance of Liquity’s LUSD even further. Investor interest in the previously unknown LQTY seems to be stoked by rising utilization indicators and validation from outside analytical companies. Liquity is a prime example of the sky-high yet transient gains that microcap altcoins can achieve.

During its breakout in mid-October, LQTY’s trading volume surpassed $330 million. But like many tokens with little trading volume, it exhibits tremendous volatility despite having a small volume of transactions.

The rotation of some speculative cryptocurrency investors towards small-cap “hidden gems” like LQTY as blue-chip asset pioneers may also be a factor in the surge. Sustainability, however, is still in doubt.

Since its peak in 2021, DeFi activity has mostly been declining. Instead of a sector-wide rebound, Liquity probably benefited from the excitement surrounding its new offers. The project’s staunch proponents nonetheless highlight its innovation in loan access and trading efficiency. Supporters claim that lending against volatile cryptocurrency as collateral is a game-changer.

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