Thread by @pLUNADAO

You've heard about @LFG_org buying more and more $BTC to secure $UST, but you're still not sure what these plans mean for $LUNA?🌕

Here's all you need to know in six tweets.🧵

1/ $LUNA is currently and will remain @terra_money's primary reserve currency for all stablecoins, including $UST.

$BTC is being implemented as a secondary reserve currency, to secure $UST in spite of the rising demand volatility created by newer protocols on @terra_money.

2/ $UST will therefore be able to be minted by either

a) Burning $LUNA (current mechanism) or

b) Trading in $BTC (new mechanism).

In both a) and b), a $1 of burnt/traded in $LUNA resp. $BTC grants you one $UST.

3/ On the flipside, $UST will be redeemable for

a) $1 worth of $LUNA (current mechanism) or

b) $0.99 (or even less) of $BTC (new mechanism).

This guarantees, that $LUNA will remain the primary reserve currency. $BTC redemptions will occur only during (slight) depeg-events.

4/ This diversion of @terra_money seigniorage from $LUNA to $BTC will - all things equal 🤔- decrease the amount of $LUNA that will be burnt to mint $UST.

So what's @stablekwon's big play here?

5/ He's betting that demand for $UST will in fact not remain equal, but rise significantly.

The adoption of $BTC as a reserve currency is meant to raise stability and credibility of $UST, as well as further demand by creating a network effect within the broader crypto space. 👀

6/ Forget about the $22mm bet on $LUNA.

THIS is the biggest wager undertaken by @terra_money and @stablekwon.

If it works out, $UST is indeed positioned to become the #1 stablecoin of the crypto space and $LUNA will skyrocket accordingly.

It's crazy, but might just work out🤝

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