Burning off market luna for Yield reserve

So… nice deposit into the yield reserve… HOWEVER!

the Luna that was burnt to mint UST was basically off-market Luna… having it burnt and mint UST at MARKET rate… is essentially diluting the market value of luna!

I see that it is locked up and being taken out slowly as aUST compounds but… if the market does not catch up with the diluted price over the lifetime of that deposit… then Terra may drop alot!

There better be that promised UST wonderland pretty soon!! (major stores accepting UST, mass adoption, etc)

This amount in the YR from this non-diluted market pricing is kind of an all or nothing play… a little bit scary to me! was this thought through when the YR was replenished?

this kind of “cheapens” honest arbitrage on market luna… does it not?

if we fast forward a year and there isn’t significant increase in economic activity (Aside from just anchor) I worry that the value of luna will be diluted alot.


Terra is designed with expansion and contraction in mind, the burn was done on the market module and expanded the UST supply, where’s the dillution? Burn also added to the staking rewards pool, so anyone staking will see benefit, Anchor included.

I don’t even understand what you’re worried about, worst that could happen is loss of faith in UST and a run back to Luna, this was the opposite of that, burning also has no direct price impact on CEXs or DEXs.


Honestly don’t understand your fear around diluting value of Luna. To the contrary, whether locked or in circulation, any Luna burnt (to mint UST) is deflationary to Luna. The expansion of UST supply cannot be inflationary either due to the stablecoin mechanism that depends on effective arbitrage to track the USD value. So who is diluting what?


very simply put.

the luna that was burnt was essentially “off market”

much the same way satoshi’s btc are considered “off market”. What would happen if he sold all his btc? gg.

take a look at coingecko
Terra market cap (based off circulating supply) is about 34bn.
Fully diluted valuation is 92bn. (based off total supply) (thats THREE TIMES)

taking off market coins and burning them at market rates is dilution of market!
it does gets slowed down by anchors 20% interest… imagine if they took that $500m worth of off market luna and dumped it market sell.

why did everyone panic about inflation when the USA FED printed 2 trillion$?? its the same thing… dilution of your money.

Your looking at it in reverse. Minting UST with luna dilutes the USD supply. The only risk here is the fed axes Terra and the rest of us for further increasing the monetary base.

In all honestly im surprised unbacked stablecoins are not considered counterfeit but its also a fundamental mechanic so it cant really be stopped.

The luna is burned, luna price rises. Its the same as a stock buyback or any other token burn. burning off market luna would at worst have no impact and at best have positive price pressure for luna. unless your going to tell me those depositors are going to sell their UST for other assets (reducing UST price, thereby reducing ust supply, then increasing luna supply by mechanic). The most likely chain for depositors is going to be aust->ust->btc->$usd

lets assume mim is 50% of the base, the 500m will likely go to buying more ether, the ust will sit in lp on curve probably against MIM or some other stable so there is no real price impact.

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