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What is Happening to Terra LUNA？
Terra Luna has made adjustments to its economic mechanism recently. This shows that DeFi has great flexibility for community decision-making. You cannot deny the wisdom of the community and the investment institutions behind this project.
In addition to attention being focused on the external expansion of the LUNA ecosystem, the endogenous financial innovation power inside this project should not be underestimated. This is hard to see in traditional finance. The stability of UST is critical, and this will likely determine whether LUNA’s economic mechanism becomes more cumbersome or more flexible in the future.
Regarding high yield payouts, there is nothing inherently wrong with that. “High yield payouts” can also become a sustainable model in the long run, provided there is sufficient financial demand for LUNA. As long as LUNA’s market value keeps growing, Luna is able to generate enough interest to cover UST’s subsidy as the market demand and application scenarios continue to expand. The key to this model is whether Terra ecology itself can continue to capture more of the web3.0 application scenarios, especially the imaginative space beyond DeFi.
Why is Terra Luna’s Price Increasing So Much?
Such bets in crypto space often mean that the project has a high profile. When it comes to investing, pessimists are often right, but optimists often succeed. As an industry builder, we need to pay more attention to things other than price. Prices are often irrational, but Terra’s own progress this year cannot be ignored. It gives us a perspective beyond Ethereum. From this point of view, it helps users to evaluate the value of the public chains more reasonably. This is also part of the reflexivity of cryptocurrency investing.
The real value of this project is that it brings the sustainability of algorithmic stablecoins to the mainstream crypto space for the first time. This shows that the algorithmic stablecoin market is still very divided. The degree to which algorithmic stablecoins like UST will be accepted in the real financial world in the future is worth the wait. This is also a serious theme that DeFi has to face in the next phase. With more projects like LUNA attracting market attention, the better it should be understood by more Muggles in the traditional financial world.
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