Thread by @AgilePatryk

@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

A closer look at $yLUNA-3m price action.

Amount of SRaA in the next 3 months is (somewhat) fixed. As time goes by, there will be less and less of SRaA left to be claimed.

That means: price of $yLUNA-3m will slowly but surely decrease to reach $0 at the end of 3-month-term.

/4

Opposite for $pLUNA-3m:

Since $pLUNA-3m + $yLUNA-3m = $LUNA, over time the price of $pLUNA-3m will be increasing towards the price of $LUNA, reaching it after 3 months.

Now, what happens after 3 months?

/5

After 3 months, neither $pLUNA-3m nor $yLUNA-3m would provide any SRaA.

To get the SRaA going further, we need combine $pLUNA-3m and $yLUNA-3m back into $LUNA... and do whatever the hell we want with it. 😎

/6

The name $yLUNA-3m probably won't stay, and here is way.

[1] There is no difference between:
- $yLUNA-6m created 3 months ago, AND
- $yLUNA-3m created now

That naming convention would lead to confusion, suggesting a difference between 2 identical tokens.

/7

[2] $yLUNA-3m informs about the duration of refraction, but not about when was it done.

How would I know if I buy freshly refracted token with 3 months of SRaA still in it, or a worthless token minted 4 months ago with all SRaA already claimed?

/8

[3] Liquidity is yet another problem.

Allowing short-term refraction at any point in time could create as many variants of $yLUNA-3m as there is blocks in 3-month-period.

/9

438,000 versions, assuming 6-second blocks

(I did the math for you - you're welcome)

That would make each $yLUNA-3m almost as unique as an NFT.

Rare? Yes.
Useful in trading? I wouldn't say so...

/10

Solution?

Quite likely there will be limits on when a fixed-term version of $yLUNA / $pLUNA can be minted.

I believe 'end of month' every month sounds like a plausible scenario.

/11

In this case we could change the naming to:

$yLUNA-2022-07

which would tell us about:
- token refracted: $LUNA
- token part: y/p
- term maturity, i.e. when the flow of SRaA would end

All that's needed to price the token correctly.

/12

In this case:

* 12-month version minted in OCT 2021
* 9-month ver. minted in JAN 2022
* 6-month ver. minted in APR 2022
* 3-month ver. minted in JUL 2022

would all be called $yLUNA-2022-10, be non-fungible from one another, and share liquidity. Much easier to trade!

/13

Season 2 will start after another inter-season episode:

👀👀Pricing of fixed-term refractions (aUST). 👀👀

Full list of episodes (with links):

https://twitter.com/AgilePatryk/status/1448951059402137611

/14-end