LUSD is likely the most decentralized stablecoin in existence, backed exclusively by Ether. If you hold LUSD, you might be interested in where to place this asset to earn additional income.

Stability Pool

Currently, the safest option is the Stability Pool, yielding around 3.9%. Keep in mind that staking in the Stability Pool carries some risk, and the yield can be affected by the price fluctuation of LQTY.

Aave v3 & v2

Aave v2 is currently yielding 3.3%, while v3 is at 1.1%. Note that v2 has been more battle-tested, so consider this when deciding which version to use. Aave v3 also allows LUSD deposits on the Optimism network, though the rate fluctuates and is currently at 0.9%.

Sonne on Optimism

Sonne, a fork of Compound Finance v2, currently yields 2.98% with an extra reward yield of 0.55%. Be aware that this protocol is still undergoing audits, so caution is advised due to potential risks.

Velodrome LPing on Optimism

By providing LUSD / USD+ on Velodrome, the rate is around 13.8%. Providing liquidity with stablecoins is relatively safe, but there may be price fluctuations during major news events, such as USDT FUD or USDC regulation news.

Conclusion

While the options above are noteworthy, remember that each protocol carries its own risks. Just because a protocol hasn’t been hacked in the past doesn’t mean it’s invulnerable in the future. Always exercise caution and conduct your own due diligence before making decisions.