LUNA Price Action
What accounts for the increasing LUNA price?
Findings & Conclusion
We can see that increasing UST in circulation is inversely proportional to LUNA circulation. This affirms what's in Terra docs that LUNA is burnt to mint new stablecoins. The burning of LUNA contracts its supply which causes an increase in price.
Therefore, the main drivers of LUNA's surge in price are:
- LUNA burn to mint new stablecoins
- LUNA buyback causing an increase in demand
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This dashboard seeks to find out what's behind LUNA's surge in price. We know that like every money market, LUNA adheres to the rules of demand and supply. According to the Terra whitepaper, for every unit of stablecoin minted, the same amount of LUNA is burned. This process is called seignorage, and this is how Terra stablecoins maintain price stability.
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