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Patryk (🌖,💙) Profile picture
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19 Oct, 9 tweets, 3 min read
@prism_protocol intro
S01E04 - pLUNA-perp pricing

Now that we have tools to price $yLUNA, we can shift the focus to $pLUNA.

As I will try to explain pricing them both tandem will be a bit like chess - easy to learn, hard to master.

/1
The foundation for our pricing will be these 2 simple rules. You can always:
1) Split 1 $cLUNA (=1 $LUNA) into 1 $pLUNa and 1 $yLUNA
2) Provide 1 $pLUNa and 1 $yLUNA back to @prism_protocol and get 1 $cLUNA (= $LUNA) back.

In other words:

$LUNA <=> $pLUNA + $yLUNA

/2
With this, the formula for $pLUNA boils down to:

$pLUNA = $LUNA - $yLUNA

Simple, right? Well, only on the surface, unfortunately.

/3
The tricky part lies in volatility = price changes of $LUNA and $yLUNA.

In short-term - think: minutes - volatility is bearable. This will allow for arbitrage in case:
$LUNA > $pLUNA + $yLUNA
OR
$LUNA < $pLUNA + $yLUNA

I am looking at you, @WhiteWhaleTerra!

/4
Long-term, however (the usual play for us, non-bots) the volatility will be an important factor. Especially in the $yLUNA part as its price depends on staking APR:
APR 3% -> 0.1998 LUNA
APR 4% -> 0.2558 LUNA
APR 6% -> 0.3679LUNA
APR 8% -> 0.4800 LUNA
APR 10% -> 0.5921 LUNA

/5
Eventually, the price of $yLUNA will reflect *community's belief* about the future staking APR rather than current APR. This will require quite a bit of price discovery - I hope liquidity $yLUNA - $PRISM will be quite decent.

$PRISM rewards for LP providers are in plan btw.

/6
Additionally, there are other forces at play which will impact price of $pLUNA, in particular:
(A) demand for leverage on $LUNA
(B) demand for borrowing against $LUNA (kinda the same thing as A, but not entirely)

All of that makes pricing $pLUNA quite challenging after all.

/7
Not to leave you with just dim thoughts like "this is sooo complicated", the price volatility will present us some opportunities too.

E.g. one could buy the dip on $yLUNA therefore securing above-normal APR on $LUNA staking.

More on that in the next episodes. ;-)

/8
S01E05 - "What can I do with yLUNA?" will be published on 20 Oct 2021 @ ~1600 UTC

Full list of episodes here:


/9-end

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More from @AgilePatryk

Patryk (🌖,💙) Profile picture
23 Oct
@prism_protocol intro
S01 - Extra #1 - fixed-term refraction

$yLUNA and $pLUNA were the stars of season 1 so far. Let's change that, as we will need more... much more for season 2.

Starting with: (fixed)-term refraction.

/1
$yLUNA and $pLUNA are so-colled perpetuals: $yLUNA represents all the yield going until perpetuity (=end of all time).

This doesn't need to be the case. People don't live that long anyway, right?

@prism_protocol will allow for shorter terms as well, e.g. 3/6/9/12 months.

/2
Let's take a look at 3 months version of refracted $LUNA and call it $yLUNA-3m and $pLUNA-3m for the time being.

$yLUNA-3m = all staking rewards and airdrops (SRaA) in the next 3 months
$pLUNA-3m = $LUNA price action in the next 3 months

/3
Read 14 tweets
Patryk (🌖,💙) Profile picture
22 Oct
@pylon_protocol intro
S01E06 - What can I do with $pLUNA?

Today I will explain some uses of $pLUNA - some of them combined with $yLUNA, still simple.
Crazy stuff in S02. 🤫

Similarly to $pLUNA, most of below is based on PRISM Protocol litepaper:
prismfinance.app/PRISM-litepape…

/1 ImageImage
[1] Stake $pLUNA in @prism_protocol and exercise your voting rights.

Even after splitting $LUNA, you will retain the ability to vote in Terra Station through PRISM as a proxy - have a vote in each of the polls.

Maybe not-so-exciting, but oh-so-important for the ecosystem.

/2
[2] Lend out your $pLUNA

So you're already staking your $yLUNA with Prism and getting staking rewards, airdrops and $PRISM incentives... and it's still not enough for you?

Well, just lend your $pLUNA out on a money-market protocol, e.g. with @mars_protocol.

Extra APR!

/3
Read 11 tweets
Patryk (🌖,💙) Profile picture
20 Oct
@prism_protocol intro
S01E05 - What can I do with yLUNA?

Today, we will look into some (rudimentary) use cases and strategies using $yLUNA.

$pLUNA might sneak here or there, but in general, I will leave its story until the next episode.

/1
Almost entirety of what you'll read in a moment is based on PRISM Protocol litepaper, available here:
prismfinance.app/PRISM-litepape…

In particular, on 2 pictures below.

/2 ImageImage
[1] Stake your $yLUNA with @prism_protocol - this way you will keep all staking rewards *and* airdrops to $LUNA stakers, with no slashing risk and no unstaking period.

Pretty darn cool, if you ask me. No more 21 days of wait to undelegate your $LUNA and use it elsewhere...

/3
Read 14 tweets
Patryk (🌖,💙) Profile picture
18 Oct
@prism_protocol intro
S01E03 - yLUNA-perp pricing

Small reminder - with PRISM we will be able to split $LUNA into $pLUNA and $yLUNA. Those 2 tokens will last forever, i.e. $yLUNA will entitle you to $LUNA staking rewards until end of times.

Let's try to a price on $yLUNA!

/1
Present value (PV) of $yLUNA is equal to PV of all $LUNA staking rewards and airdrops to $LUNA stakers.

Quick check in Terra Station and we know that staking LUNA gives us 3.19% APR right now.

station.terra.money

/2
Courtesy of terra.smartstake.io/airdrops it's easy to check APR on regular airdrops of:
$ANC - 1.21% for the next 77 weeks
$MINE - 0.65% / 90 weeks
$MIR - 0.43% / 11 weeks
$VKR - 0.60% / 52 weeks

@SmartStake is a wonderful community validator btw - I recommend delegating to them

/3
Read 14 tweets
Patryk (🌖,💙) Profile picture
17 Oct
@prism_protocol intro
S01E02 - DCF valuation method

Let's start it with a poll - which one would you prefer:
1) Get $100 now
2) Get $100 in a month

/1
Somehow we feel that a particular amount of money is 'more valuable' now than the same amount sometime in the future.

Money in our pocket now can make more money in the future.

/2
To put it into numbers, we could invest into a risk-free investment vehicle (if there is one at all, ha ha) that would guarantee APR d%, then:

Now => In a year
$100 => $100 * (1 + d%)

/3
Read 10 tweets
Patryk (🌖,💙) Profile picture
16 Oct
@prism_protocol intro
S01E01 - Core Feature of PRISM

Some folks have already written about Prism Protocol, most notably:

@danku_r -
@YieldLabs -
@wolf_of_defi -
@terranaut3 -

/1
This is just to say that I am embarking on what seems to be a beaten path... only to venture forth a little bit further.

Still, the series would not be complete without a few words of introduction on what the @prism_protocol will allow us to do.

/2
@prism_protocol will let us deposit @terra_money yield-bearing assets and will give us $cAssets as a deposit confirmation.

Next, it will allow us to refract (split) a $cAsset into:
- yield-bearing part = yield token (YT)
- principal part = principal token (PT)

/3
Read 6 tweets

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