The Aave community voted on adding LUSD as a loanable asset in Aave V2. According to the proposal, LUSD will only be added as a loanable asset (0% LTV). If there is sufficient demand for loans, the LTV can be increased later. Once the main network v3 is available , you can also enable efficiency mode. LUSD is an over-collateralized stablecoin minted with ETH on Trove, and there are two mechanisms that help it stay pegged: First, LUSD can be redeemed for ETH at par (i.e. $1 for $1 of ETH). Second, the minimum collateralization ratio is 110%.