Here's why $LUNA is - still - undervalued and why YOU should be buying it right now, if you're looking for #financialfreedom💸
A🧵that might just change your life.
A🧵that might just change your life.
1/ $LUNA's financial revolution is closely tied to it's stablecoins. To understand the importance of #stablecoins, you must know that they account for a vast majority of trading volume in #crypto and are of course at the center of putting the #currency back into #cryptocurrency.
2/ Now, on the #terraluna ecosystem there are stablecoins for a lot of different currencies (USD, EUR, CHF, GBP, KRW, etc.) but the currently most integrated and used one is the USD-stablecoin: UST💲
3/ $LUNA's innovation however lies not in the amount of stables, but rather in how they function.
To understand this, we must take a brief look at different type of stablecoins:
- Fiat-backed ( $USDT, $BUSD, $USDC)
-Crypto-backed ( $DAI or $MIM)
-Algorithmic ( $LUNA's stables)
To understand this, we must take a brief look at different type of stablecoins:
- Fiat-backed ( $USDT, $BUSD, $USDC)
-Crypto-backed ( $DAI or $MIM)
-Algorithmic ( $LUNA's stables)
4/ Fiat-backed #stablecoins face the inherent problem that #cryptocurrency is trying to solve in the first place: Trust 🗝
You need to trust that
a) the fiat-backings really exist and that...
You need to trust that
a) the fiat-backings really exist and that...
5/
b) no centralized entity will make you unable to spend them (Yes, @Tether_to can really do that).
Further, fiat-backed stables face regulatory risk: Government's could #freeze the fiat-backing, effectively making the stablecoin #unbacked😰
b) no centralized entity will make you unable to spend them (Yes, @Tether_to can really do that).
Further, fiat-backed stables face regulatory risk: Government's could #freeze the fiat-backing, effectively making the stablecoin #unbacked😰
6/ Wondering why $USDT is still the no. 1 stablecoin?
Yes, so are we. But we'll get to that 😉
Yes, so are we. But we'll get to that 😉
7/ Crypto-backed stablecoins have some advantages over fiat-backed stables, as they do not face the same regulatory risk and they also don't require #trust.
However, crypto-backed stables such as $DAI or $MIM face their own set of struggles...😒
However, crypto-backed stables such as $DAI or $MIM face their own set of struggles...😒
8/ They are necessarily #overcollateralized, since their creation is akin to a #borrowing procedure. That means for every $DAI in existence, there's collateral in excess of the value locked away.
9/ While these sorts of stablecoins have their use case, they will not be able to become prevailing mediums of exchange.
Why not?
Why not?
10/ It's heavily inefficient. Imagine having to lock away $1,50 for every $1 you spend.
Further, the minting requires borrowers looking to leverage (lend against their collateral). This means the growth of the stablecoin is limited by the amount of new leveragors.
Further, the minting requires borrowers looking to leverage (lend against their collateral). This means the growth of the stablecoin is limited by the amount of new leveragors.
11/ Enter $LUNA's UST 👀... the world's leading decentralized, #algorithmic stablecoin.
Soooo, how does that work?
Soooo, how does that work?
12/ It's simple, and herein lies the beauty of @terra_money's design:
Want $UST (or any other #Terra-stable)? Just burn $1 worth of $LUNA and you'll get it.
Want your $LUNA back? Just burn your $UST and get $1 worth of $LUNA.
(Don't worry, you and I just buy on exchanges)
Want $UST (or any other #Terra-stable)? Just burn $1 worth of $LUNA and you'll get it.
Want your $LUNA back? Just burn your $UST and get $1 worth of $LUNA.
(Don't worry, you and I just buy on exchanges)
14/ But how is the #peg secured?
Again, it's quite simple really. The algorithm guarantees you'll be able to ALWAYS redeem one $UST for $1 worth of LUNA (and vice versa!).
If...
Again, it's quite simple really. The algorithm guarantees you'll be able to ALWAYS redeem one $UST for $1 worth of LUNA (and vice versa!).
If...
15/ ... $UST is trading below peg (e.g. $0.9), arbitrageurs are incentivized to burn their $UST for $LUNA and make an instant 10 % gain. By burning UST, supply is decreased until the peg is restored.
If...
If...
16/ ... $UST is trading above peg (e.g. $1.1), arbitrageurs are incentivized to burn their $LUNA for more $UST and make an instant 10 % gain as well. By minting $UST, suppy is increased until the peg is restored.
End result = #pegstrong
End result = #pegstrong
17/ If you have paid close attention you might have noticed a crucial detail:
$UST is created by burning $LUNA 🔥
This reduces total (& circulating!) supply, driving up $LUNA prices📈
$UST is created by burning $LUNA 🔥
This reduces total (& circulating!) supply, driving up $LUNA prices📈
18/ As the demand for $UST increases, $LUNA supply is continously burning.
That's why @terra_money founder @stablekwon likes to envision a future where only a single $LUNA token will be left (" $LUNA as an NFT")...
Screenshot related...🔥🔥🔥
That's why @terra_money founder @stablekwon likes to envision a future where only a single $LUNA token will be left (" $LUNA as an NFT")...
Screenshot related...🔥🔥🔥
20/ Well... is demand for $UST increasing though?
Yes, yes it is. It's currently printing at its maximum rate of $100mm a day and is fully capped out.
Screenshot shows UST demand in mcap:
Yes, yes it is. It's currently printing at its maximum rate of $100mm a day and is fully capped out.
Screenshot shows UST demand in mcap:
21/ At this rate, $UST is headed to be the no. 1 #stablecoin in all of crypto😍
When that happens, "$1000 $LUNA " might be missing a couple of zeros🤯
What are you waiting for, anon?🤝
When that happens, "$1000 $LUNA " might be missing a couple of zeros🤯
What are you waiting for, anon?🤝
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