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    Wrapped UST Token (UST), The price-volatility of cryptocurrencies is a well-studied problem by both academics and market observers (see for instance, Liu and Tsyvinski, 2018, Makarov and Schoar, 2018). Most cryptocurrencies, including Bitcoin, have a predetermined issuance schedule that, together with a strong speculative demand, contributes to wild fluctuations in price. Bitcoin’s extreme price volatility is a major roadblock towards its adoption as a medium of exchange or store of value.Intuitively, nobody wants to pay with a currency that has the potential to double in value in a few days, or wants to be paid in a currency if its value can significantly decline before the transaction is settled.

    The problems are aggravated when the transaction requires more time, e.g. for deferred payments such as mortgages or employment contracts, as volatility would severely disadvantage one side of the contract, making the usage of existing digital currencies in these settings prohibitively expensive. At the core of how the Terra Protocol solves these issues is the idea that a cryptocurrency with an elastic monetary policy would maintain a stable price, retaining all the censorship resistance of Bitcoin, and making it viable for use in everyday transactions. However, price-stability is not sufficient for the wide adoption of a currency. Currencies inherently have strong network effects:

    a customer is unlikely to switch over to a new currency unless a critical mass of merchants are ready to accept it, but at the same time, merchants have no reason to invest resources and educate staff to accept a new currency unless there is significant customer demand for it. For this reason, Bitcoin’s adoption in the payments space has been limited to small businesses whose owners are personally invested in cryptocurrencies. Our belief is that while an elastic monetary policy is the solution to the stability problem, an efficient fiscal policy can drive adoption. In addition, the Terra Protocol offers strong incentives for users to join the network with an efficient fiscal spending regime, managed by a Treasury, where multiple stimulus programs compete for financing. That is, proposals from community participants will be vetted by the rest of the ecosystem and, when approved, they will be financed with the objective to increase adoption and expand the potential use cases. The Terra Protocol with its balance between fostering stability and adoption represents a meaningful complement to fiat currencies as a means of payment and store of value. The rest of the paper is organized as follows. We first discuss the protocol and how stability is achieved and maintained, through the calibration of miners’ demand and the use of the native mining Luna token. We then dig deeper into how stable mining incentives are adopted to smooth out economic fluctuations. Lastly, we discuss how Terra’s fiscal policy can be used as an efficient stimulus to drive adoption.

    Introduction

    The price-volatility of cryptocurrencies is a well-studied problem by both academics and market observers (see for instance, Liu and Tsyvinski, 2018, Makarov and Schoar, 2018). Most cryptocurrencies, including Bitcoin, have a predetermined issuance schedule that, together with a strong speculative demand, contributes to wild fluctuations in price. Bitcoin’s extreme price volatility is a major roadblock towards its adoption as a medium of exchange or store of value. Intuitively, nobody wants to pay with a currency that has the potential to double in value in a few days, or wants to be paid in a currency if its value can significantly decline before the transaction is settled.


    The problems are aggravated when the transaction requires more time, e.g. for deferred payments such as mortgages or employment contracts, as volatility would severely disadvantage one side of the contract, making the usage of existing digital currencies in these settings prohibitively expensive. At the core of how the Terra Protocol solves these issues is the idea that a cryptocurrency with an elastic monetary policy would maintain a stable price, retaining all the censorship resistance of Bitcoin, and making it viable for use in everyday transactions. However, price-stability is not sufficient for the wide adoption of a currency. Currencies inherently have strong network effects:


    a customer is unlikely to switch over to a new currency unless a critical mass of merchants are ready to accept it, but at the same time, merchants have no reason to invest resources and educate staff to accept a new currency unless there is significant customer demand for it. For this reason, Bitcoin’s adoption in the payments space has been limited to small businesses whose owners are personally invested in cryptocurrencies. Our belief is that while an elastic monetary policy is the solution to the stability problem, an efficient fiscal policy can drive adoption. In addition, the Terra Protocol offers strong incentives for users to join the network with an efficient fiscal spending regime, managed by a Treasury, where multiple stimulus programs compete for financing. That is, proposals from community participants will be vetted by the rest of the ecosystem and, when approved, they will be financed with the objective to increase adoption and expand the potential use cases. The Terra Protocol with its balance between fostering stability and adoption represents a meaningful complement to fiat currencies as a means of payment and store of value.


    The rest of the paper is organized as follows. We first discuss the protocol and how stability
    is achieved and maintained, through the calibration of miners’ demand and the use of the native mining Luna token. We then dig deeper into how stable mining incentives are adopted to smooth out economic fluctuations. Lastly, we discuss how Terra’s fiscal policy can be used as an efficient stimulus to drive adoption.

    Essential Information

    Started Date Unknown
    End Date Unknown
    Acceptable currencies USD, BTC, ETH
    Wrapped UST Token Price $1.02 USD
    Token Name Wrapped UST Token
    Token Symbol UST
    Wrapped UST Token ROI 0.21%
    Website Link Home
    Market Cap No Data
    Circulating Supply No Data
    Whitepaper Whitepaper
    Market Rank #2379
    Number of tokens for sale
    Tokens exchange rate
    Minimal transaction amount

    More about Wrapped UST Token (UST):

    The existential objective of a stable-coin is to retain its purchasing power. Given that most goods and services are consumed domestically, it is important to create crypto-currencies that track the value of local fiat currencies. Though the US Dollar dominates international trade and forex operations, to the average consumer the dollar exhibits unacceptable volatility against their choice unit of account. Recognizing strong regionalities in money, Terra aims to be a family of cryptocurrencies that are each pegged to the world’s major currencies. Close to genesis, the protocol will issue Terra currencies pegged to USD, EUR, CNY, JPY, GBP, KRW, and the IMF SDR. Over time, more currencies will be added to the list by user voting. TerraSDR will be the flagship currency of this family, given that it exhibits the lowest volatility against any one fiat currency (Kereiakes, 2018). TerraSDR is the currency in which transaction fees, miner rewards and stimulus grants will be denominated. It is important, however, for Terra currencies to have access to shared liquidity. For this reason, the system supports atomic swaps among Terra currencies at their market exchange rates. Several issues have been raised in implementing decentralized oracles, but chief among them is the possibility for voters to profit by coordinating on a false price vote. Limiting the vote to a specific subset of users with strong vested interest in the system, the miners, can vastly decrease the odds of such a coordination. A successful coordination event on the price oracle would result in a much higher loss in the value of the miner stakes than any potential gains, as Luna stakes are time-locked to the system. The oracle can also play a role in adding and deprecating Terra currencies. The protocol may start supporting a new Terra currency when oracle votes for it satisfies a submission threshold. Similarly, the failure to receive a sufficient number of oracle votes for several periods could trigger the deprecation of a Terra currency.

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