$BTC holders seeing the benefits of the decentralized stable coin $UST
But what about the potential for BTC on Terra's ecosystem? Could it gain value, like $LUNA?
A 🧵on
- an opportunity met by a problem
- how it gets solved to unlock value
- how this can happen for BTC too
But what about the potential for BTC on Terra's ecosystem? Could it gain value, like $LUNA?
A 🧵on
- an opportunity met by a problem
- how it gets solved to unlock value
- how this can happen for BTC too
1.
As a place to start, when $UST is created, an equal value of $LUNA is burned. So when LUNA was $1, it was a 1:1 burn.
But the # of LUNA is capped, so if UST demand picks up, LUNA's value goes up as it gets more scarce.
It just passed 25% of the total supply burned. Not bad.
As a place to start, when $UST is created, an equal value of $LUNA is burned. So when LUNA was $1, it was a 1:1 burn.
But the # of LUNA is capped, so if UST demand picks up, LUNA's value goes up as it gets more scarce.
It just passed 25% of the total supply burned. Not bad.
2.
Knowing how BTC's scarcity gives it strength, you can see why #LUNAtics celebrate $UST adoption. It floors LUNA's price due to amazing deflationary tokenomics.
That's not the end of it, though.
Building a strong ecosystem around UST gives additional use cases/value to LUNA.
Knowing how BTC's scarcity gives it strength, you can see why #LUNAtics celebrate $UST adoption. It floors LUNA's price due to amazing deflationary tokenomics.
That's not the end of it, though.
Building a strong ecosystem around UST gives additional use cases/value to LUNA.
3.
Like BTC, early LUNA holders were looking to give LUNA "something to do."
B/c the stronger the apps built on top, the more utility is given to LUNA.
While this doesn't cause any burn, it does take LUNA out of circulation, making available LUNA to purchase less.
Like BTC, early LUNA holders were looking to give LUNA "something to do."
B/c the stronger the apps built on top, the more utility is given to LUNA.
While this doesn't cause any burn, it does take LUNA out of circulation, making available LUNA to purchase less.
4.
Here's 1 example:
An exciting Defi protocol, @prism_protocol, just launched.
It allows you to split POS assets 50/50 into the yield portion and principle portion.
This unlocks more value by enabling you to do more with the same amount of the underlying asset.
Here's 1 example:
An exciting Defi protocol, @prism_protocol, just launched.
It allows you to split POS assets 50/50 into the yield portion and principle portion.
This unlocks more value by enabling you to do more with the same amount of the underlying asset.
5.
LUNA was first and was split into yLUAN and pLUNA.
We didn't know what to expect as far as price action. Which would people initially value more, the yield or the principle?
Being able to sell either, the market would tell us.
LUNA was first and was split into yLUAN and pLUNA.
We didn't know what to expect as far as price action. Which would people initially value more, the yield or the principle?
Being able to sell either, the market would tell us.
6.
Overwhelmingly, people chose yLUNA, since the yields on the Prism protocol were so juicy.
People would sell their pLUNA for more yLUNA.
Starting at a 50/50 split, the market starting pushing it to 80/20.
Overwhelmingly, people chose yLUNA, since the yields on the Prism protocol were so juicy.
People would sell their pLUNA for more yLUNA.
Starting at a 50/50 split, the market starting pushing it to 80/20.
7.
It started getting so bad that people started questioning the value of pLUNA at all.
And if pLUNA has no value, then what's the purpose of Prism at all? You should just keep it in LUNA and not split at all.
But that's not what happened.
It started getting so bad that people started questioning the value of pLUNA at all.
And if pLUNA has no value, then what's the purpose of Prism at all? You should just keep it in LUNA and not split at all.
But that's not what happened.
8.
Other protocols saw the problem and recognize it as an opportunity.
Ideas came forward and other protocols got to building.
A solution not only helps their own project but causes just another black hole for LUNA.
Other protocols saw the problem and recognize it as an opportunity.
Ideas came forward and other protocols got to building.
A solution not only helps their own project but causes just another black hole for LUNA.
9.
Ideas like Prism using some of their war chests to buy pLUNA for cheap.
If they burnt it, pLUNA becomes more scarce.
Since it's needed to combine w/ pLUNA to turn back to a whole LUNA, LUNA also becomes more scarce.
Ideas like Prism using some of their war chests to buy pLUNA for cheap.
If they burnt it, pLUNA becomes more scarce.
Since it's needed to combine w/ pLUNA to turn back to a whole LUNA, LUNA also becomes more scarce.
10.
Other protocols, like @mars_protocol, could accept pLUNA as collateral to lend against.
Again, granting pLUNA more utility increases its value, and in turn, increases Prism's value, which increases LUNA's value.
Other protocols, like @mars_protocol, could accept pLUNA as collateral to lend against.
Again, granting pLUNA more utility increases its value, and in turn, increases Prism's value, which increases LUNA's value.
11.
So LUNA continues to burn as UST grows in adoption + gets pulled out of circulation as it gains utility.
What if Terra just kicked off BTC's journey to increased value by "giving it something to do?"
So LUNA continues to burn as UST grows in adoption + gets pulled out of circulation as it gains utility.
What if Terra just kicked off BTC's journey to increased value by "giving it something to do?"
12.
That's the vision of Terra's big brains.
Using BTC as a pristine asset to support UST's peg during turbulent times gives it another thing to do.
And there could be more use cases coming.
That's the vision of Terra's big brains.
Using BTC as a pristine asset to support UST's peg during turbulent times gives it another thing to do.
And there could be more use cases coming.
13.
Getting BTC on @anchor_protocol is a reoccurring conversation on Terra. Loans on native BTC through decentralized channels?
BTC's POW requires a different look at value capture, like what we're seeing from @alkimiya_io's defi for mining.
Getting BTC on @anchor_protocol is a reoccurring conversation on Terra. Loans on native BTC through decentralized channels?
BTC's POW requires a different look at value capture, like what we're seeing from @alkimiya_io's defi for mining.
14.
In addition, $UST and $LUNA being added to #THORChain adds a decentralized swap mechanism but also makes those LPs interesting not only for earning yield but using them as collateral for a loan.
In addition, $UST and $LUNA being added to #THORChain adds a decentralized swap mechanism but also makes those LPs interesting not only for earning yield but using them as collateral for a loan.
15.
Once some of these initial problems get solved and open up the use cases for BTC, it allows for the next set of innovators to solve the next problem and capture that opportunity, just like what's happening on Prism for LUNA.
Once some of these initial problems get solved and open up the use cases for BTC, it allows for the next set of innovators to solve the next problem and capture that opportunity, just like what's happening on Prism for LUNA.
16.
It will be a difficult mental hurdle to overcome, but BTC only doesn't seem to be the best future possible.
The pie is smaller, the use cases are less, and the vulnerability to those in opposition to decentralization is greater.
It will be a difficult mental hurdle to overcome, but BTC only doesn't seem to be the best future possible.
The pie is smaller, the use cases are less, and the vulnerability to those in opposition to decentralization is greater.
17.
BTC's limitations are what make its security shine and keep it the reigning apex asset.
It's the base layer for other protocols to build upon from other more flexible blockchains.
All by design.
This is the next (not final) chapter and it's exciting.
BTC's limitations are what make its security shine and keep it the reigning apex asset.
It's the base layer for other protocols to build upon from other more flexible blockchains.
All by design.
This is the next (not final) chapter and it's exciting.
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