Make 45% With One Of DeFi's Top Projects, Step-by-Step
How I have implemented this strategy
One of the most exciting projects I have found in the DeFi environment is Terra ($Luna). This project has real day-to-day applications, and its technology is being used by more than 60,000 daily users and has a total of 2.5M users in South Korea.
“The government wants to fool its people by doubling the minimum wage but at the same time printing more than enough money into circulation. We can’t solve problems by creating more problem for generations to come which is why Bitcoin and some other decentralized finance applications powered by blockchain technology looks to be our only hope of creating a better future.” — Olawale Daniel
Anyone who believes in the future of stablecoins should understand how this project works.
Most stablecoins are centralized (USDC, USDT, etc.). However, the stablecoin backed by Terra (Luna) is called USD Terra (UST). It has an algorithm whereby more UST is demanded. The more Luna is burned as collateral. Making the price of the stablecoin maintain its 1:1 relationship with the dollar.
UST is the largest decentralized stablecoin in crypto and the fastest-growing stablecoin market cap, expanding 37,000% YTD from $7m to $2.6b.
When more Luna is burned, it reduces the number of Luna tokens in circulation. This causes the token price to increase simply because there is more UST in circulation.
Our newsletter showed you how to take advantage of the UST and float it with a return of 20% per year with minimal effort.
The volume of transactions made with UST amounts to $53B as of September 2019, and seeing the exponential growth, it is trending to exceed $100B by the middle of this year.
So if you buy UST, you hold it at 20%, which burns Luna and raises the price of the token. And additionally, we can also get an extra yield with the Luna coin by holding it, this is a very profitable investment in the long run.
If this is your goal, there is an excellent opportunity to arbitrage with Luna and bLuna tokens and get up to a 45% annual return.
Below I will explain how I have done it with my money:
Step 1: Buy UST or Luna
We buy in an Exchange UST or Luna and send it to our Terra Station portfolio. In my case, I bought UST and transformed it through Terra Station’s Swap into Luna. 1 Luna = 44.11 UST. I bought about 20 Luna.
Step 2: Swap Luna by bLuna
In the Swap part of Terra Station, we exchange our Luna for bLuna. This is a bAsset. It is a token used in the environment as collateral for many operations. As a general rule, the ratio of Luna:bLuna should be 1:1. However, we see that in exchange, we get 1:1.0295, which implies 3% higher. We change the 20 Luna and get 20.59 bLuna.
Step 3: Burn bLuna
We go to the Anchor protocol, which is created in the Terra environment and used for UST staking. We burn our bLuna and receive Luna as a reward. After 21–24 days, we receive 20.59 Luna in our Terra Station Wallet. Now yes, the ratio bLuna: Luna is 1:1.
This arbitrage gains about 3% in 21–24 days. If we repeat consistently, we could earn over 45% annually, assuming compound interest.
Luna maximalists believe that the token can reach $1,000. From my point of view, it can be an excellent alternative, but we must take into account how Luna tokens were distributed in the ICO. A large part of the coin is in very few hands.
As you can see, the possibilities that cryptocurrencies give us are endless. It is worth understanding them and knowing how to use them.
This can make us earn a lot of money in the long term. But we must keep in mind that in a short time, they are very volatile.
Changing our perception of the long term can help our finances and help us have a much more asymmetric portfolio.