- Joined: Oct 2, 2012
- Last Login: May 21, 2022, 12:52pm EDT
- Comments: 150
Share this profile
For reference, these videos represent the standard of educational delivery I’m judging that NFT video against:
Hardly disconnected from humanity, and most certainly NOT pro-crypto. Just more level-headed and less unhinged and sensationalistic when it comes to enumerating criticisms.
Comment 1 reply
Comment 2 replies
"Line Goes Up" summarize it quite nicely: https://youtu.be/YQ_xWvX1n9g?t=693
Always, always, ALWAYS be wary of an educational/informative video that also openly depicts its creator’s emotional investment and judgementality.
What does Terra do with the net proceeds it makes from issuing its currency? That money, along with the investor money, all is spent on funding operational costs including paying interest on yield farming, correct?
Theoretically, apart from the ICO, Terraform Labs had no control over how its currency got issued. LUNA is "minted" automatically by the network when people burn UST, and UST is "minted" automatically by the network when people burn LUNA. Terraform Labs couldn’t just reprogram the blockchain to give themselves more LUNA or UST than they started out with. If someone wanted to invest in Terra, they had to buy LUNA off an exchange, which would drive LUNA’s price up. Since Terra held its own "treasury" of LUNA, they would benefit from any appreciation in LUNA’s price.
Now, as for what would have given LUNA its value, the promised product was the Terra blockchain itself. Blockchain networks are essentially decentralized cloud computers. Anytime someone sends a transaction to the network, they are essentially asking the network to execute a bit of code, which can be as simple as, "User A sends X coins to User B," or it can be a complex application, like a decentralized exchange. Each transaction has a transaction fee that needs to be paid in a blockchain’s native coin (LUNA or UST), which means if you want to use the blockchain’s computing power, you need to buy LUNA from an exchange. That fee you pay then gets sent to whoever’s computer executed your code, and LUNA’s price goes up because you had to buy it to pay that fee, and thus so does the investments of the ICO investors and Terra itself.
Comment 1 reply, 10 recs
Comment 2 replies, 8 recs
The most charitable thing you could say about that 20 percent rate is that maybe it was meant as a customer acquisition strategy, and the APY was going to be revised lower later.
In point of fact, it WAS going down. It went down to 16% in May from 19% in April, and was going to go down further until it reached low-single digits.
As for where the money came from? It was cash from the VC firms that Terra lured in, like Jump Capital, among others. They filled up an incentive fund of several billion dollars. Anchor then siphoned the money from this treasury to incentivize borrowers on Anchor by offering near-zero or even negative interest rates, while also incentivizing lenders by offering 20% interest rates.
It wasn’t a "Ponzi" in the typical sense because it didn’t rely on any inflows to generate the returns; it was almost all completely coming from that incentive fund. The whole goal was to attract lots of users (and maybe developers) before the money ran out. Which it did, except the developers didn’t have enough time to build anything else on Terra before it collapsed. If they had, there’s a chance it might have survived.
Comment 1 rec
Still far from eradicating the blight of blockchain
Never gonna happen. Have you kept track of what’s happening in Ukraine and Russia?
Comment 1 reply, 1 rec
actually online payments (from a customer point of view) only got more of an hassle in the last few years that it was before
I don’t think you were around in the 90s and early 00s if you’re making a statement like that.
Comment 1 rec
I remember when the Apple Watch first came out, one of the big knocks people had against it was the fact that it was square, so much so that the round shape of competing Android watches were actually used as selling points (e.g. Moto 360).