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Breaking News: Tether Resolves Celsius Lawsuit With Major $300 Million Settlement Deal
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Breaking News: Tether Resolves Celsius Lawsuit With Major $300 Million Settlement Deal

Why LUNA’s Tokenomics Points To A Sustain Rally

Reynaldo Marquez
Reynaldo Marquez
4 years ago
2 mins read
NEAR LUNA Terra LUNAUSDT

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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.

Terra LUNA LUNAUSDT
LUNA moving sideways in the daily chart. Source: LUNAUSDT Tradingview

Researcher and investor Flood Capital have compared Terra’s stablecoin UST with Tether, USD 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:

UST is currently the 5th largest stable coin with a mcap over $1.87b and ~$100m daily trading volume, it has done this with only 7 exchange listings. The Luna ecosystem has generated massive demand for UST with no major listings, this indicates clear product market fit.

UST Demand Leads To LUNA’s Appreciation

Further data from Flood Capital indicates demand for UST has skyrocketed from January 25th to April 25th. During this period, UST’s supply has gone from less than $500 million to the current levels. On average, the stablecoin has grown by $18 million per day. Flood Capital added:

Thus $18m worth of Luna being burned. I expect this to accelerate with more protocol releases and cross chain composability with Columbus-5.

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.

Terra LUNA UST
Source: Flood Capital

The researcher expects more projects to be launch on Terra’s ecosystem and possible further listings of UST in major exchanges. According to the co-founder of Terra Do Kwon, UST’s market cap could hit $10 billion by end of 2021. Flood Capital said:

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.

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Reynaldo Marquez
Reynaldo Marquez

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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