#yLUNA will fail without a strong case for #pLUNA.
A 🧵 on the symbiotic relationship between these tokens.
1/ While as #pLUNADAO we are focusing on creating value and use cases for #pLUNA, we believe these tokens to have a "symbiotic" relationship. Neither can thrive, without the other succeeding as well.
3/ The #yLUNA token derives its value from representing ownership of all #LUNA#staking rewards as well as #airdrops.
#pLUNA on the other hand, represents the "principal" of the #LUNA token. #LUNA's value insofar as it is NOT derived from #staking or #airdrops.
4/ Lately, we have seen a surge of demand for #yLUNA compared to its #pLUNA counterpart (currently around $14 for #pLUNA vs. $65 for #yLUNA).
Market participants are attributing a significantly higher value portion to #yLUNA. #pLUNA's inherent value proposition is doubted.
5/ If this trend were to keep up, #pLUNA is at risk of asymptotically moving towards a valuation of $0. Contrary to popular belief, this would have devastating effects on #pLUNA AND on #yLUNA's inherent value proposition.
6/ The core of @prism_protocol's refraction mechanism lies in the separation of the principal investment (#pLUNA) from the derivable income (#yLUNA).
If one of these synthetic assets captures ALL value of the underlying #LUNA, then the refraction loses its purpose.
7/ As such the continous success of #yLUNA is also dependent on the survival of #pLUNA.
This is why the #pLUNADAO's core purpose is securing the utility of the #pLUNA token and thus fostering not only #pLUNA's success, but making sure #yLUNA is here to stay as well.
8/ To achieve this, we are actively researching and collaborating on #pLUNA use cases. We are happy to share more exciting news in the coming weeks, so definitely stay tuned!
1/ @prism_protocol's innovative approach of allowing users to split ("refract") their #LUNA tokens into #pLUNA and #yLUNA lies at the core of the protocol.
For this service, a portion of yield derived through the protocol goes towards #PRISM stakers, i.e. #xPRISM#hodlers.
2/ While all of the juicy details can be found @ prismprotocol.notion.site, the gist of it is as follows:
By holding #PRISM and staking it for the auto-compunding #xPRISM token, you effectively become a shareholder of @prism_protocol's income stream.