What's the maximum supply of $LUNA?
Is it still at 1 Billion?
How does its maximum supply make $LUNA deflationary?
We are putting an end to these questions right now.
๐งต๐
Is it still at 1 Billion?
How does its maximum supply make $LUNA deflationary?
We are putting an end to these questions right now.
๐งต๐
$LUNA's maximum supply was set at 1 billion at genesis.
That was a long time ago.
Currently, $LUNA has no max supply.
Here's why:
$LUNA is used to maintain $UST's peg.
So...
To mint $UST you need $LUNA.
The more $UST you want to mint...
That was a long time ago.
Currently, $LUNA has no max supply.
Here's why:
$LUNA is used to maintain $UST's peg.
So...
To mint $UST you need $LUNA.
The more $UST you want to mint...
The more $LUNA you must have in circulation.
That's why the supply of $LUNA can't be limited.
In the long term...
As demand for $UST rises...
So will $LUNA's price - as it'll become deflationary.
Check out our in-depth thread to learn more:
That's why the supply of $LUNA can't be limited.
In the long term...
As demand for $UST rises...
So will $LUNA's price - as it'll become deflationary.
Check out our in-depth thread to learn more:
So, does that mean $LUNA will be minted willy nilly?
Not really.
$UST and $LUNA work in tandem to maintain $UST's peg.
So if the value of $UST falls below $1,
$UST will be swapped to $LUNA to bring the peg back to $1.
Why?
Not really.
$UST and $LUNA work in tandem to maintain $UST's peg.
So if the value of $UST falls below $1,
$UST will be swapped to $LUNA to bring the peg back to $1.
Why?
Reducing the supply of $UST will increase its price.
And take it back to $1.
On the other hand:
You'll also see a rise in $LUNA's circulation.
In short:
$LUNA gets minted to maintain the peg of $UST...
When it goes below $1.
What does this mean for price of $LUNA?
And take it back to $1.
On the other hand:
You'll also see a rise in $LUNA's circulation.
In short:
$LUNA gets minted to maintain the peg of $UST...
When it goes below $1.
What does this mean for price of $LUNA?
There's always a possibility that the demand for $UST could drop.
This would mean that $UST's peg goes below $1.
Which leads to $UST being swapped to $LUNA.
This rise in $LUNA's supply would cause a drop in its price.
For those HODLing $LUNA for the long term...
This would mean that $UST's peg goes below $1.
Which leads to $UST being swapped to $LUNA.
This rise in $LUNA's supply would cause a drop in its price.
For those HODLing $LUNA for the long term...
This could spell doom.
The question is:
Will this happen?
The answer is:
Only time will tell.
The Terra ecosystem is growing rapidly.
More and more projects and protocols are choosing Terra as their home.
And, all of them are using $UST.
The question is:
Will this happen?
The answer is:
Only time will tell.
The Terra ecosystem is growing rapidly.
More and more projects and protocols are choosing Terra as their home.
And, all of them are using $UST.
A rise in demand for $UST.
Plus:
Investors prefer to move their funds to stablecoins during a bear market.
This adds further to $UST's demand.
More demand for $UST = More $LUNA burned = Rise in $LUNA prices.
Will this continue forever?
Only time will tell.
Finally:
Plus:
Investors prefer to move their funds to stablecoins during a bear market.
This adds further to $UST's demand.
More demand for $UST = More $LUNA burned = Rise in $LUNA prices.
Will this continue forever?
Only time will tell.
Finally:
A quick look at $LUNA's supply:
Total Supply: 792.71M
Circulating Supply: 388.88M
Liquid Circulating Supply: 124.12M
Wait...
What's the difference between these three?
We'll cover that next.
Watch out for our next post on this!
Total Supply: 792.71M
Circulating Supply: 388.88M
Liquid Circulating Supply: 124.12M
Wait...
What's the difference between these three?
We'll cover that next.
Watch out for our next post on this!
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