Crypto Stablecoin Report 10: Introduce the Algorithmic Stablecoin Project Terra (Luna)
Original link: https://bihu.com/article/1470645325
Original publish time: July 21, 2020
Original author: HaiBo Jiang, researcher of MYKEY Lab
We released MYKEY Crypto Stablecoin Report to share our interpretation of the development status of stablecoins and analysis of their development trends to help the participants in the crypto market stay updated on the development status of stablecoin. The MYKEY Crypto Stablecoin Report will be published every week, looking forward to maintaining communication with the industry and exploring the development prospects of stablecoin together.
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- The market capitalization of the major stablecoins increased to $12.223 billion.
- Last week, the circulation of USDC, BUSD, and DAI increased by 6.6 million, 6.17 million, and 7.88 million, while the circulation of USDT remained unchanged.
- The number of Terra users increased to 1.758 million. In the past 6 months, the number of Terra users has increased by 10.57% on average every month.
- In the past 30 days, Terra has an average of 5,562 daily active users.
- As of the evening of July 19, CHAI, the payment gateway (wallet) of Terra is the DApps with the most active users, with 44,300 active users in the past 24 hours.
1. Overview of Stablecoin Data
First, let’s review the changes in the basic information of the various stablecoins in the past week(July 11, 2020, ~ July 17, 2020, same below).
Market Circulation
Source: MYKEY, CoinMarketCap, Coin Metrics
At present, the market circulation of major stablecoins is approximately $12.223 billion, and the market capitalization continues to grow.
Source: MYKEY, Coin Metrics
In the past week, the market capitalization of stablecoins has increased by approximately $5.29 million. Among them, the circulation of USDC, BUSD, DAI, and GUSD increased by 6.6 million, 6.17 million, 7.88 million, and 910,000, while the circulation of PAX, TUSD, and HUSD decreased by 7.67 million, 100,000, and 8.49 million. The circulation of USDT remained unchanged.
The Number of Holding Addresses
Source: MYKEY, DeBank
Last week, the number of main stablecoin holding addresses on Ethereum all increased and increased by 36,072.
Source: MYKEY, DeBank
The number of holding addresses of USDT, USDC, PAX, TUSD, and DAI increased by 28,995, 3,181, 2,198, 72, and 1,626.
The Number of Active Addresses
Source: MYKEY, Coin Metrics
The number of active addresses of stablecoins last week increased by an average of 1% compared to the previous week.
The Number of 24-hour Transactions on the Public Blockchains
Source: MYKEY, Coin Metrics
Compared with the previous week, the number of daily transactions of major stablecoins increased by an average of 2.63%.
The Number of 24-hour Volume of Transactions on the Public Blockchains
Source: MYKEY, Coin Metrics
Source: MYKEY, Coin Metrics
The daily volume of transactions of major stablecoins last week decreased by an average of 3.2%.
2. Algorithmic stablecoin project Terra (LUNA)
In the seventh stablecoin report, we introduced the compliance and asset transparency of commonly used collateralized stablecoins. Among them, USDT, which is the most used, has the worst compliance, which also brings a certain risk to the entire cryptocurrency market. In addition to collateralized stablecoins, there is also a class of algorithmic stablecoins. In this report, we will introduce LUNA with a 50% price increased in a week.
Source: TradingView
Terra was founded by the founder of TMON, South Korea’s second-largest e-commerce company, and received $32 million of investment from Binance Labs, Okex, Huobi Capital, Polychain Capital, FBG Capital, and other institutions at the beginning of establishment in 2018. The current market capitalization of LUNA is $121 million, ranking 71st in CoinMarketCap.
There are two types of tokens on Terra, the native token Luna and the stablecoin family Terra, burning Luna allows for the minting of Terra. Terra includes stablecoins anchored to the US dollar, euro, RMB, yen, pound, won, and a basket of currencies. Other types of stablecoins can be added by voting. Different from MakerDAO and other CDP Stablecoin Systems, there is a corresponding relationship between Collateralized Debt Positions in MakerDAO and the people who generate debts, and they will face liquidation when the collateral rate is too low. In Terra, there is no such relationship. Anyone can burn Luna to mint Terra or send Terra to the system to obtain the equivalent of Luna, which enables Terra to be anchored to the value of the legal currency. For example:
When the price of TerraSDR < 1SDR, users and arbitrageurs can send 1TerraSDR to the system to obtain Luna worth 1SDR.
When the price of TerraSDR > 1SDR, users and arbitrageurs can send Luna worth 1SDR to the system to obtain 1TerraSDR.
The Terra protocol uses a proof-of-stake mechanism. By collateralizing Luna mining, voting rights can be delegated to verification nodes. The miner also acts as a Price Oracle and needs to vote on the exchange rate between Luna and the target legal currency asset, taking the weighted average of the votes to get the final exchange rate. Miners will be punished if their votes are too inaccurate. Collateralized Luna will also enjoy a certain income, and its value capture capability is similar to tokens of Exchange platform.
Mining Terra requires payment of 0.1%-1% seigniorage tax to miners. According to the white paper, the upper limit of this fee is 1SDR (approximately $1.39) and transactions with higher fees have an advantage over traditional payment methods.
As the use of Terra increases, more Luna will be burned to mint Terra.
Vote to govern Terra, such as adding other types of Terra tokens.
Prophecy rewards and gas fees.
According to calculations, in the 199 days from the beginning of the year to the present, the average annualized return of collateralized Luna is 12.8%. The number of Luna collateralized is 305 million, the collateral rate is 30.59%, and collateral income includes seigniorage, prophecy rewards, and gas fees.
Source: station.terra.money
Because of the founder, Terra has attracted a large number of users. Terra established Terra Alliance with e-commerce partners including Woowa Brothers, Qoo10, Carousell, Pomelo, and TIKI. As you can see from the chart below, Terra attracted a larger number of active users at the beginning of the startup and currently has 1.758 million users. In the past 30 days, Terra has an average of 5,562 daily active users. In the past six months, the number of Terra users has increased by an average of 10.57% every month.
Source: station.terra.money
According to the ranking of Dapp.com, as of the evening of July 19, CHAI, the payment gateway (wallet) of Terra is the DApps with the most active users, with 44,300 active users in the past 24 hours.
Source: MYKEY, DApps.com
As we can see from the above analysis, in addition to the familiar legal collateralized stablecoins, there are also many people using Terra for payments. Among the top 100 blockchain projects by market capitalization, there are also Crypto.com, MCO, Nano, MonaCoin, Reserve Rights, and other projects related to payments or stablecoins. Blockchain is getting closer and closer to our lives.
3. Questions of Readers
Question 1. Maker DSR is 0. Why are there still 70 million DAI in DRS?
Answer: According to DAI Stats, the total supply of DAI is 205 million, of which 131 million are ERC20 tokens, and another 69.8 million are deposited in DSR. If DAI is deposited on platforms such as Aave, there is an annualized interest rate of 4%, and there is no reason for investors to deposit DAI in DSR. After our multiple verifications, Compound deposited the market liquidity part (deposit and loan balance) into DSR. At present, the total deposits of DAI in Compound are 774 million, the total borrowing is 717 million, and the deposit-loan balance is 66 million.
Question 2. The amount of DAI in Compound has exceeded the total amount of DAI. How does this affect DAI?
Answer: First of all, we can see that the total deposit of DAI in Compound is always greater than the total borrowing, and the deposit-loan balance is close to 70 million DAI, which means that the increase in deposits in Compound will not bring risks to DAI. Besides, the total deposit of DAI in Compound in July rose from $43 million to the current $777 million. At the same time, the supply of DAI also rose from 128 million to 223 million. On the one hand, the increase in the supply of DAI is related to Maker increasing the upper limit of DAI, and on the other hand, it may also be related to the demand brought by Compound, which is positive for DAI.
Tips
To better communicate with industry insiders, we decided to add two sections for questions of readers and opinions of guests. If readers have questions about stablecoins, please contact us. We will pick meaningful questions to answer in the next issue. At the same time, welcome guests from the industry to share your views on stablecoins. Contact information: jianghb@mykey.org.
This is what we’re sharing in this MYKEY Crypto Stablecoin Report, welcome to stay tuned for follow-up crypto stablecoin reports. We will provide more interpretations of the development status of stablecoins and analysis of their development trends to help you stay updated on the development status of stablecoin in the follow-up report.
PS: MYKEY Lab has the final right to interpret the content of the article, please indicate the source for the quotation. Welcome to follow our official account — MYKEY Lab: MYKEY Smart Wallet.
Past review
MYKEY Crypto Stablecoin Report 03: Where are the users of DAI?
Crypto Stablecoin Report 07: Security Analysis of Stablecoins
Crypto Stablecoin Report 08: Interpretation of Digital Dollar Project
Crypto Stablecoin Report 09: Analyze the lending leverage of Compound
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