Liquity is a decentralized borrowing protocol that offers unprecedented benefits for borrowers.
The Stability Pool is the first line of defense in maintaining system solvency. It achieves that by acting as the source of liquidity to repay debt from liquidated Troves—ensuring that the total LUSD supply always remains backed. The Stability Pool is funded by users transferring LUSD into it (called Stability Providers).
Users can deposit LUSD tokens to the Stability Pool and make the protocol more robust against ETH price drops.
Stability Providers are incentivized by Liquity in two ways:
Stability Providers can withdraw their ETH gains and LQTY rewards at any time, while LUSD deposits can be withdrawn as long as the system contains no liquidatable debt.