LUSD is the most decentralized stablecoin and is entirely issued, managed and redeemed on-chain.
It is part of Liquity Protocol, a lending App that is autonomous, immutable and governance-free.
LUSD is one of the safest on-chain stablecoins, because it requires no governance, management or trust in counter-parties. In designing such a stablecoin, the makers of LUSD have made a conscious decision to eliminate risks which stem from human judgement and embrace technical risks instead.
Liquity advertises a minimum required collateralization ratio (CR) of 110%, which can be perceived as risky, but the actual CR is currently above 250%.
Although Liquity's smart contracts have been audited twice and no exploits have occurred till date, users are reminded that smart contract and oracle risks cannot be eliminated. Unidentified vulnerabilities can lead to a loss of all funds. This risk is common to all stablecoin systems that are managed by smart contracts.
LUSD is most ideal for sophisticated users who trust code over humans as custodian of their assets, and are capable of making independent judgment about a stablecoin's technical risk.

LUSD often trades above $1 (typically between $1 and $1.05) in the open market even though Liquity protocol only guarantees a redemption value of $1 per LUSD.

Users who buy LUSD above $1 are warned that they could incur a small loss if LUSD's market price drops below their purchase price. We, therefore, advise against buying LUSD above $1.

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