foobar on Twitter with more in depth analysis of UST/LUNA and why anyone thinking of getting in now should think twice.
A brief $LUNA explainer ๐งต
I'll discuss why buying at a $10m marketcap isn't the slam-dunk winning trade you think it is ๐
LUNA and UST are inseparably linked. When UST trades below peg, traders can redeem UST for $1 worth of LUNA. This LUNA is freshly minted and dumped on the open market.
The circulating supply has increased 20-fold over the past few days, and minting velocity is still accelerating to compensate for token price dump.
So if supply increases another 20x, then you're really buying at a $200m marketcap rather than a $10m marketcap.
And if it increases another 20x twice, then you're buying at a $4 billion marketcap.
Remember that UST still has a $7 billion marketcap that would be $17 billion if it returned to peg. LUNA holders are the exit liquidity for UST redemptions. The math is impossible, how can a $10m coin compensate holders of a $7000m coin?
Do Kwon has publicly announced plans to sacrifice LUNA holders in hopes of reducing circulating UST supply, making it easier to regain the peg later on. He straight-up told you his plans, and LUNA is being sacrificed exactly as said.
Do Kwon has also proposed to increase the LUNA minting rate, which should drastically *increase* the already-rapid rate of LUNA supply increase.
The LUNA/UST mechanics are identical to the TITAN/IRON mechanics as I noted several days ago. TITAN's price is now measured in "number of zeros in front", and I wouldn't be surprised if LUNA ends up the same way.
