Terra (LUNA) has been moving sideways during the past day but record impressive gains in the weekly chart with a 30.1% profit, at the time of writing. On the 1-year chart, the token has 8,794% in profits. The project has seen several partnerships. However, its core strength seems to be its tokenomics.
Researcher and investor Flood Capital have compared Terra’s stablecoin UST with Tether, USD
” href=”https://www.newsbtc.com/dictionary/coin/” data-wpel-link=”internal”>Coin, DAI, to explained LUNA’s tokenomics. According to Flood Capital, part of the token’s supply must be burned with every UST minted on Terra’s ecosystem.
Tokens with burn mechanisms and deflationary pressure have seen tremendous appreciation during this cycle. Binance native token BNB and PancakeSwap’s CAKE amongst them. As the researcher said, $1 of UST minted equals $1 of LUNA burned.
With a market cap estimated at $1.87 billion, UST is in the top 5 stablecoins behind DAI, Binance USD, and USDC with Tether in the highest positions. Flood Capital expects UST to increase in adoption and demand. Therefore, the token’s supply will be reduced. The researcher said:
The token’s current circulating supply stands at 376 million with 254 million already staked. The researcher concluded there are only 122 million tokens available in the market. On average, the token’s supply is burned at .27% daily. Flood Capital said:
Companies like Apple and Exxon, renowned for their share buyback programs have bought back ~20-25% of their shares over 5-10 years! Luna is doing those same numbers in 100-125 days.
As shown in the chart below, the token could run out of “liquid coins” in around 122 days if UST demand continues to grow.
The Luna ecosystem has just really started with only 2 major applications, yet this has caused the creation of over 1.5b UST in the past 3 months. As Luna continues to attract developers, new protocols and UST demand will explode, we are still early.
Source: NewsBTC.com
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