Terra: Could LUNA Really Go to The MOON?? 🌑

this crypto bull market has me discovering new cryptocurrencies every day projects are emerging left and right but it's rare to come across a crypto that stands out as a serious competitor in its niche as it so happens i seem to have found a cryptocurrency project that fits this profile terra has found a unique way to mint stable coins that are pegged to various fiat currencies in a decentralized manner the circulating supply of terra's us dollar stable coin ust has doubled over the last month and has consequently become one of the largest stable coins by market cap this is because terra has been building new protocols and partnering with existing ones that leverage the ust stablecoin for borrowing lending staking and even synthetic stock trading terra's native lunacoin has also been rising up the ranks as a result and today i'm going to tell you why i think luna has a serious shot of making it to the moon [Music] before we blast off there are some illusions i need to cast off i am not a financial advisor and nothing in this video should be considered financial or investment advice if you need financial help you're going to have to get it yourself consult a financial advisor or dyor to become wiser if this is your first time stopping by the name is guy and it's my pleasure to say hi here at the coin bureau i crank out the highest quality crypto content you'll ever see crypto coins crypto news crypto reviews crypto market booms and crypto market blues are just a few of the topics i tackle if this is the subject matter that gets you hammered subscribe to the channel and ping that notification bell so you know when it's time to binge if you take a gander at the video timeline you'll notice a few time stamps have been left to optimize your viewing experience you can skim over them to get a sense of what i'll be covering and you can even skip around between them if you're looking for something specific okay that's about it for the ground rules let's take off with terror terra was created by a korean blockchain company called terraform labs terraform labs was incubated by the terror alliance a conglomerate of 15 e-commerce companies in korea and southeast asia terraform labs was founded by daniel shin and doe quan in january 2018. daniel is a graduate from the famous wharton school of economics and is also the founder of four korean companies including an e-commerce platform called t-mon a startup incubator called fast track asia and the chai payments app doe holds a degree in computer science from stanford university and made the forbes 30 under 30 list in 2019 prior to terraform labs doe worked as part of microsoft's natural language processing team and later founded a startup called anyfi that specialized in peer-to-peer telecommunications solutions such as meshed wi-fi networks doe describes terra as being one of the few cryptocurrency projects that look outwards rather than inwards in its approach to growth and adoption to that end tera is intended to be the back end of the various apps and products being built by terraform labs and the terra alliance as i mentioned in the introduction terra allows for the creation of stable coins pegged to various fiat currencies the terror mainnet launched in april 2019 which introduced the krt stablecoin that is pegged to the korean one krt is used by more than a dozen applications to settle payments including chai which boasts over 2 million users because chai uses the terra blockchain it is technically a decentralized application and is actually one of the most used decentralized applications in cryptocurrency logging nearly 100 000 users per day tera's us dollar stablecoin ust began printing in september 2020. demand for ust has gone through the roof since then because of mirror protocol which launched in december 2020 and the soon to be released anchor protocol a mysterious third protocol called alice also seems to be in the works all three protocols are built on the terra blockchain and were created by terraform labs before i dive into the significance of those i should probably explain how terra actually works the terra blockchain was built using the cosmos sdk and uses the tendermint delegated proof of stake consensus mechanism like some other cosmos based chains terra has a limit of 100 validators which makes it less decentralized than other proof-of-stake networks a medium post from august notes that quote the terror blockchain is able to reach hundreds of transactions per second terror transactions are usually settled within six seconds and only cost a few cents to execute unlike other decentralized stable coins like make a dao's die terror stable coins are not collateralized per se to mint a terror stable coin like ust you need to burn the equivalent dollar amount of terra's native coin luna for example if you wanted to mint 10 ust and the price of luna was 10 then you would need to just burn one luna the crazy thing is that you can also burn terra stable coins to redeem the equivalent value of luna if you had 10 ust and the price of luna was 5 you would get 2 luna for burning that ust this creates a clever financial incentive that ensures terror stablecoins always maintain their fiat peg for example imagine one luna costs ten dollars but the price of one ust is a dollar fifty lunar holders could then burn their luna to mint ust and make a fifty percent profit this increases the supply of ust bringing its market value back to one dollar conversely if you have 10 ust and the price of ust is just 50 cents you could burn that ust to mint yourself a whole lunar coin since luna's market value is ten dollars that's an instant 2x return the ustu burned reduces the supply of ust which raises the market price of ust back to one dollar validators on terra provide oracle services to ensure the market prices of ust and luna are correct for accurate conversions i should note that these extreme discrepancies in redemption rarely happen in practice because there are so many people arbitraging between lunar and terror stable coins at any given time also a small portion of the lunar that's used to mint terror stable coins is not burned but is instead sent to terra's community treasury lunar holders decide how those funds get spent and are also able to change various parameters of the terra blockchain this delicate balance between terror stablecoins and luna is meant to be analogous to the earth and the moon which rely on each other for gravitational stability and rotation now this only just scratches the surface of how terra works and i'll leave an article in the description that gives you a more in-depth look if you're interested now things get a bit fuzzy when it comes to luna's tokenomics terra held a series of private sales for the lunacoin in early 2019 and there was no public ico this list of private sale investors included binance hobi okx and about half a dozen venture capital firms some sources note that 210 million lunar were sold during these private sales but others note that as many as 385 million luna were sold luna's private sale price ranged from 16 to 80 cents per coin these private sales reportedly raised anywhere between 32 and 72 million dollars luna seems to have a dynamic maximum supply of 1 billion meaning the network is designed to burn lunar coins if its supply is more than 1 billion now it's not entirely clear how many lunar were minted at genesis as i was not able to find any primary sources that detail these metrics the only tokenomic information that was consistent across the secondary sources i dug up is related to the allocation of luna's unknown genesis supply 26 percent of this genesis supply was sold during the private sales i just mentioned four percent of luna's genesis supply was allocated towards quote genesis liquidity on exchanges basically only four percent of lunar's initial supply was available to folks like you and me when it started trading 10 of luna's genesis went to terraform labs 20 was allocated to employees and contributors 20 was earmarked for the terror alliance and the remaining 20 is held in stability reserves these are meant to help maintain the fiat pegs of terror's various stable coins when the crypto market is volatile all coins allocated to the terraform labs team and private investors will be fully vested by the spring of next year with most of the vesting occurring in the coming months if you don't know what vesting is or why it matters be sure to watch my video about tokenomics by clicking up there in the top right beside stablecoin minting luna is used for staking on the terror blockchain since luna is not inflationary validators and delegators earn various network fees instead given the low fees of the terra blockchain lunar staking is not very lucrative and yields a whopping 1.5 percent annual return still over 30 percent of luna's supply is currently being staked and any staked luna is subject to a 21-day unlocking period now as i've mentioned many times before this means that if the price of luna starts to go parabolic any lunar being state will not be getting sold on an exchange anytime soon on that note parabolic is the perfect word to describe luna's price action since the start of 2021. it has pulled more than a 10x move since january and continues to rally this seems to be due to the insane demand for ust which drove up its price above its one dollar peg multiple times in late january and early february if you follow terra on twitter you'll know that the protocol has been burning millions of lunar per week to mint the ust required to maintain its dollar peg the real question is where all of this demand for ust is coming from and the answer seems to be the mirror protocol and binance's booming cd5 ecosystem as i mentioned earlier the mirror protocol was built by terraform labs and exists on the terra blockchain mirror protocol makes it possible to mint tokens that mirror the prices of stocks and other assets now this lets anyone with an internet connection get exposure to the price action of stocks like amazon tesla and yes gamestop now these synthetic tokens are called m assets and minting them requires depositing terra's ust stablecoin as collateral at least 150 percent of the ust value of the m asset must be deposited so if you want to mint a synthetic stock that's worth one thousand dollars you need to deposit at least fifteen hundred dollars worth of ust if your usc collateral falls below the ratio due to price changes bad things happen and i'll leave it at that for the sake of time you can learn more about synthetic stocks by watching my recent video about the best alternatives to robin hood hit that link for the good stuff mirror protocol uses the band protocols oracle solution to keep track of the market prices of its m assets and these prices are updated every 30 seconds m asset holders can provide liquidity to trading pairs on the platform and earn some pretty handsome annual percentage yields for doing so this is thanks to the printing of the mia mir token whose initial supply was airdropped to luna holders and any wallets holding uni-swap's uni token before you ask yes this means you can also use m assets on ethereum and transport them to and from the terra blockchain using mirror finance's shuttle bridge but that's not all because the binance smart chain is also built using the cosmos sdk it is easily interoperable with the terra blockchain there is currently over 30 million wrapped ust on the binance smart chain and some yield aggregators like autopharm are offering generous yields on ust m-asset stock pairs like ust tesla ust amazon and ust netflix mirror finance alone has over 700 million dollars of value locked 200 million of which is m assets the craziest part is the terrastation wallet lets you easily send ust and m assets directly to ethereum and the binance smart chain the recent upgrade to cosmos also makes it possible to swap assets between the terra blockchain and substrate-based blockchains like kusama and polkadot this insane interoperability is why i think tera's upcoming developments are going to be a game changer for the cryptocurrency space in june 2020 terra announced it had partnered with cosmos solana and the web 3 foundation which develops polkadot and kusama to create a protocol called anchor as many of you all know you can earn some pretty lucrative annual interest rates on any cryptocurrencies deposited into lending and borrowing protocols like rv and compound the thing is that these interest rates are not stable they fluctuate from day to day depending on the supply and demand of each lending pool obviously people want stability so they can plan ahead but this stability is quite hard to find in the cryptocurrency space one of the only interest accruing methods that provides relatively stable returns is staking on proof-of-stake blockchains as a validator or delegator this is exactly what anka is going to leverage to provide the first ever stable interest rate cryptocurrency platform instead of depositing your cryptocurrency into another d5 protocol any cryptocurrency deposited into anchor will be staked on a proof-of-stake blockchain behind the scenes this will likely be other cosmos chains substrate chains and apparently solana as well now what happens when you have a robust payments network a way of investing in stocks and commodities and have also found a way to earn a stable interest rate on your savings in a decentralized and permissionless manner well i'd say you've basically created a fully fledged alternative to the current financial system all that's left to do is put all of these protocols together and give this all in one package a nice user friendly front end while doing research for this video i came across an obscure twitter account called alice which seems to be this hypothetical one-stop shop for the future of finance there's almost no information about alice finance besides what's on that twitter account and the strange connection some spectators have made suggests this is going to be something much bigger than tera's previous endeavors i'll leave a link to the twitter account in the video description so you can do your own digging whatever alice finance is we probably won't be seeing it until the anchor protocol has been launched and stress tested now as far as i can tell anka won't be released until tera has completed its columbus 5 network upgrade which i was unable to find a date for it also doesn't help that tera hasn't updated its roadmap the most recent roadmap was released in the summer of 2020 and most of the milestones mentioned in it have already been met one thing i do know is that we're going to be seeing the ust stablecoin on a lot more blockchains and exchanges this is because of project surge a recently announced initiative by terror that will reward anyone who convinces a d5 protocol to incorporate the ust token this will be damn easy to do considering terra is interoperable with so many blockchains this will increase the demand for ust which will increase the demand for luna to mint that ust and that my friends is why i think the lunacoin has so much potential all right folks let me give you my real two cents on terror i think this is one of the most exciting cryptocurrency projects i've seen in some time and part of me regrets not covering terra sooner the founders are legit terraform labs is constantly innovating and a lot of progress has been made since the terra main net went live in 2019 the terra blockchain has seen some real use and adoption by various e-commerce apps and platforms in southeast asia as well that said i don't think that terror will be the back end of the global payment system anytime soon with only a few hundred transactions per second it's a bit of a miracle that the terror blockchain has not been completely clogged up by its existing user base i also can't shake the feeling that something shady is going on with luna's tokenomics i could not for the life of me find any concrete information about how those coins were distributed and that makes me think that this is by design moreover i have a hunch that the 30 of luna being staked is actually the luna that has yet to vest to the team and all of terra's private investors vcs seem to have stuck to terror like flies to a pie and that's always a bad sign in my books however there's no denying that terra seems to have put together a promising set of protocols that have been proven to be effective thus far the fact that terra is so interoperable is just the cherry on top i think this project has an incredibly promising future and this will be reflected in luna's evaluation i'm going to be keeping a very close eye on alice and i suggest you do the same she is looking good if you enjoyed this video you can make my day by smashing that like button if you want to make sure you get a nudge when the next one is out subscribe to the channel and ping that notification bell if you need a break from constantly checking coin market cap and coin gecko well follow me on twitter and instagram to get an abridged version of what's going on in the crypto market and behind the scenes here at the coin bureau studio you can also join the coin bureau insider telegram channel for daily market updates and you can subscribe to my weekly newsletter to get your fill of crypto goodies like a breakdown of my crypto holdings if you've got a dime to spare get a shirt that makes you look flair on the coin bureau merch store all proceeds go towards supporting the channel and my quest for world domination just kidding or am i maybe you'll find out if you tune in next time stay sane and stay safe crypto guy has gotta fly

Channel: Coin Bureau

Views: 256,433

Rating: 4.9675064 out of 5

Keywords: Terra, LUNA, BSC, Binance Smart Chain, Mirror, Stablecoins, UST, Crypto, Blockchain, Mirror Protocol, MIR

Id: 7HLiZxkbxfY

Length: 19min 24sec (1164 seconds)

Published: Mon Mar 01 2021

Reddit Comments

[u/aboutcoolscience]

Cool! Finally Luna is getting the attention it deserves!

[u/josefillo]

Guy never jokes around! Possibly the best crypto content out there.