2/ First, it creates *billions* in cashflows for luna stakers over the next 2 years and makes Luna a highly countercyclical asset.
After col-5, all swap fees for burning Luna to Terra get paid out to Luna stakers spread out over 2 years.
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3/ The staking rewards are paid out in UST, which makes Luna pretty unique among PoS assets in paying out double digit (13% pa so far) in non-recursive assets
This makes Luna *countercyclical* to market downturns - when Luna price goes down, staking returns go up linearly
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4/ Other staking assets don't have this property - in literally any other PoS system, price falls of the native staking asset also decreases the staking reward, as the basis is the same
The community burn makes Luna a significantly more resilient asset to downturns
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5/ Second, it's important to observe what the community does with the new 4-5B in UST to be minted - obviously creating 5B UST in a vacuum doesn't really do anything
I've hinted that:
1. The CP will protect against depeg risk of UST
2. Insurance
3. Aid multichain expansion
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6/ On depeg risk - I've grown quite tired of arguing with idiots on Twitter on whether UST can remain stable in bear.
So soon I will propose creating multi billion dollar reserves in decentralized assets (BTC and others) in an attempt to save myself time. More to follow.
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Wouldn’t the purchase of this reserve create an expansion in Luna circulating supply? Perhaps it’s done slowly enough that it only partially offsets the natural burn we would see had this not happened.
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No
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Your selling the ust to get the BTC reserves. When Ust is sold in any material way it leads to a decrease in price. To offset that price decrease Luna is minted.
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If you sell a bunch of ust it would reduce the price, if there isn’t offsetting demand. When price is reduced Luna is minted in order to get ust back on peg. I’m happy to be wrong, seeking to understand and haven’t heard what I view as a correct counter
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We’re not selling any UST to buy BTC
Where was that claimed
It was asked as a question. How will the Btc reserves be obtained?
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Unless you plan to donate 10 figures in btc, dont worry about it
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