Watch the Onchain Analytics video here — https://youtu.be/CRFKy9m9tWw
Follow Kash DeFi twitter handles!
@kash_sam_
@kashron2021
@gnawkz
@kashdefi
Displayed above:
- 1 billion Luna at genesis
- 127 million Luna have been burned thusfar (around $32 million in UST)
- Current remaining Luna supply today is 873 million
- 468 million Luna is held by Terraform labs. This is basically soft-illiquid because it won’t all be sold immediately.
- Any Luna that will be introduced to the market from the TFL wallet, like with project redacted, will be for very strong reasons that strengthen the Terra ecosystem 🚀
- Ape math: if you’re mega conservative and cut it in haf (160 million) to 68 million Luna burned (at $68 Luna price), that means the price of Luna has to double to $120 to mathematically meet burning requirements (to 93 million).
- That’s why the Kash DeFi team constantly focuses on the liquid circulating supply of Luna. Only the very small green bar on the bottom right.
Displayed above:
- Using the historical burn numbers, you can do a projection that $5 billion of UST will be burned in 6 months (61 million Luna)
- As a reference point, there was around 10 billion UST at end of 2021
- As long as UST continues to go up, Luna will be burned, reducing the cap. How much Luna is burned is dependent on price.
- If the market undergoes a correction (like what happened recently) that just means EVEN MORE Luna is burned. Long term bullish!!!
- At the current rate, 71 million Luna will be burned in 6 months. With Terra companies like Kash DeFi enabling fiat on-ramps (ACH in US and IBAN in Europe) in the next 2–3 months, this projected burn rate could be accelerated even further.
- Is there a problem of “how do you burn more Luna than the circulating supply”??? What?!?!?!?!?! You must watch the end of the video to listen to this point. 🚀🚀🚀🚀🚀🚀🚀🚀🚀
- There’s 2 scenarios that can come from burned Luna: price goes up or down
- In scenario 1, Luna’s price goes up. This means you can mint more UST for each Luna. If current trend continues, you burn less Luna.
- In scenario 2, if Luna’s price goes down, you burn more Luna because you need to burn more Luna to create UST.
- Net burn spiked in recent months, largely due to UST market cap exploding.
- This data is also visualized in the chart on the right, showing the acceleration of Luna burn due to UST growth.
- In both scenarios, in long term it has positive pressure on price.
Displayed above:
- Staked Luna is soft removed from the circulating supply, because (1) it takes 21 days to unstake, and (2) there’s an attractive APY for staked Luna
- Staked Luna can be considered more illiquid than staked crypto in other Layer 1s due to these mechanics.
- Collateralized bLuna on Anchor is very illiquid, because repaying loans is difficult and still takes 21 days.
- When people get liquidated on Anchor, the Luna doesn’t go back into the circulating supply.
- When you get bLuna through Kujira successfully, that Luna is still staked and out of circulating supply. It’s still illiquid. As long as it stays as bLuna, it’s still staked.
Displayed above:
- Reinforcing the point above, staked APY is amazing!
Displayed above:
- The truly liquid Luna is only 93 million
- It’s so small, that means it’s easy for market participants to push Luna up or down
- However, if market participants push Luna down, that means that more Luna is burned for UST growth (going back to earlier point), which is long-term mega-bullish for Luna
