Researcher and investor Flood Capital have in contrast Terra’s stablecoin UST with Tether, USD Coin, DAI, to defined LUNA’s tokenomics. Based on Flood Capital, a part of the token’s provide have to be burned with each UST minted on Terra’s ecosystem.
Tokens with burn mechanisms and deflationary stress have seen super appreciation throughout this cycle. Binance native token BNB and PancakeSwap’s CAKE amongst them. Because the researcher mentioned, $1 of UST minted equals $1 of LUNA burned.
With a market cap estimated at $1.87 billion, UST is within the high 5 stablecoins behind DAI, Binance USD, and USDC with Tether within the highest positions. Flood Capital expects UST to extend in adoption and demand. Subsequently, the token’s provide will probably be lowered. The researcher mentioned:
UST is at present the fifth largest secure coin with a mcap over $1.87b and ~$100m every day buying and selling quantity, it has completed this with solely 7 change listings. The Luna ecosystem has generated huge demand for UST with no main listings, this means clear product market match.
UST Demand Leads To LUNA’s Appreciation
Additional knowledge from Flood Capital signifies demand for UST has skyrocketed from January 25th to April 25th. Throughout this era, UST’s provide has gone from lower than $500 million to the present ranges. On common, the stablecoin has grown by $18 million per day. Flood Capital added:
Thus $18m price of Luna being burned. I anticipate this to speed up with extra protocol releases and cross chain composability with Columbus-5.
The token’s present circulating provide stands at 376 million with 254 million already staked. The researcher concluded there are solely 122 million tokens out there available in the market. On common, the token’s provide is burned at .27% every day. Flood Capital mentioned:
Corporations like Apple and Exxon, famend for his or her share buyback packages have purchased again ~20-25% of their shares over 5-10 years! Luna is doing those self same numbers in 100-125 days.
As proven within the chart under, the token might run out of “liquid cash” in round 122 days if UST demand continues to develop.
The researcher expects extra tasks to be launch on Terra’s ecosystem and doable additional listings of UST in main exchanges. Based on the co-founder of Terra Do Kwon, UST’s market cap might hit $10 billion by finish of 2021. Flood Capital mentioned:
The Luna ecosystem has simply actually began with solely 2 main purposes, but this has induced the creation of over 1.5b UST prior to now 3 months. As Luna continues to draw builders, new protocols and UST demand will explode, we’re nonetheless early.