Terra. Luna. Strategy.

Thesis

Okay, Terra: $LUNA and $UST. The crash happened, but that's not a rugpull, not by definition.

Now, @stablekwon says $UST is not the answer. When Terra moves off $LUNA and $UST to something else,

... that is a rugpull. By definition.

So, I froze there for a second. But: this is going to happen.

It doesn't matter what happens: it matters what I do.

This transition off $LUNA / $UST is going to take a month, more or less? to find a viable alternative.

That's my window of opportunity.

Let's get to work.

Antithesis

Okay.

Terra.

$LUNA.

The price-variability seems to have settled for now, with Price Impact below 1% again.

How are we going to do this, folks?

*everybody stares at me, waiting.

Wut.

Okay, $LUNA's back to high volatility: let's play a game.

I want you to pretend with me that the crash didn't happen.

Why?

Because I have 4M $LUNA. How would you manage 4M $LUNA pre-crash?

For me (and perhaps ONLY for me), the answer is: "the same way I'll manage $LUNA now."

Continuing this game, how will I manage 4M $LUNA now?

4 domains, I'm thinking:

1. $LUNA-> $cLUNA arb
2. $LUNA-> $bLUNA arb
3. $LUNA-> $LunaX arb
4. $LUNA, no arb

It's overly simplistic, but it captures the 4 domains of @prism_protocol, @anchor_protocol, @staderlabs, and misc.

Okay, but arbs are tricky things on Terra, particularly. Why? because they take the $LUNA-in-transition out of circulation for 21 days. You do an arb, you're COMMITTED, baby, and you get nothing for it for those 21 days. So, I say 'arbs,' but these arbs must be handled with care.

So, my 'handle with care'-approach is as follows:

• per domain, I allocate 25% of the $LUNA for arbs,
• per arb per domain, I allocate ~5% $LUNA/day for arbs

Thus we (re)born infinite $LUNA wells for each arb-type.

Let's do the math. ... (pause)

Arbitrage

Continuing this exploration. Here's a conundrum.

The $bLUNA -> $LUNA 21-day burn mechanism still assumes a $bLUNA - $LUNA peg, 1-to-1.

But trading $LUNA for $bLUNA has a very different narrative. That trade is ~ 20-to-1 in Terra now.

So the $bLUNA burn sucks.

This story is repeated for $cLUNA and $LunaX as well. The burn mechanism 'works' as before (1-to-1+ε), but the trades are terribly slanted away from $LUNA now.