Introduction

Stake Or LP LUNA? Prism Protocol Allows You To Do Both Concurrently

At its core, Prism enable to break up, what they call refract, LUNA into two distinct components. This will see LUNA become yLUNA (the yield component) and pLUNA (the principal component).

Traditionally on defi , we could only perform one action at a time using 1 LUNA: either stake (yield) or put up as collateral to borrow (principal) as an example. But Prism now allow us to do both, at the same time!

At the current time, Prism enable to increase efficiency in terms of earning yield on Yield Bearing Assets (YBA), such as LUNA.

This also resolves the issue of inaccessibility to liquidity when the asset is staked or the risk of liquidation when using the asset as collateral.

Image Credit: Prism’s Litepaper

The table above sums up the flexibility of Prism allowing the user to get the best of both worlds.

Pricing of pLUNA and yLUNA

The prices of pLUNA and yLUNA is not the same.

For a start, yLUNA’s price are largely affected by the staking rewards that we see on Terra Station. In general, the higher the staking rewards, the higher the value of yLUNA.

As such, pLUNA’s value are affected by the price of yLUNA as well apart from market forces. Thus, the higher the value of yLUNA, the lower the value of pLUNA since an efficient market necessitates that both adds up to 1 LUNA.

Think of it as bonds in traditional finance where premium bonds will converge to their face value as it nears maturity. Similarly, the value of yLUNA will converge to 0 as it nears the maturity of a fixed-term contract allowing 1 pLUNA to = 1 LUNA.

Structure

In the current dashboard, we are looking for to investigate the relative value of pLuna and yLuna by explorer at some valuation procedures.

At the current study, we aims to review the situation of input and output of pLuna to the LP of prism protocol farm. The below chart show us this matter from the start.

As the same above chart the Max input flow was on 15th Feb and 8th Mar.

And now it's turn of looking for the price changes of pLuna in the same period. we can see that in the below chart.

The inflow to the pool seems to have been one of these influential flows because we understand with a little care that shortly after the large inflows the impact on the price of the pool is visible. In fact, more entry of this token derived into the pool has a direct impact on value. It has had and also its exit shows a negative impact.

Now let's go to look at the derived yLona token and examine the effect of the inflow to the stake pool on the value of this token.

Following chart shows the inflow of this token to the stake pool

As the same above chart we can see the increase in input flow has increased the value and users have preferred to convert their Luna tokens to yLUNA and stake them.

Conclusion

PRISM aims to empowers DeFi users with innovative tools to manage volatile price exposure and fluctuating yields. this for Terra network users can lead to expose their assets to Luna in the high-risk markets of Defai, whose their assets are at risk at all times, by converting them into derivative tokens and depositing them in this project. assets and maturities can quickly be introduced to bring more users to the ecosystem and increase TVL. PRISM goal is synthesize these new instruments and enable their full functionality within an extremely intuitive platform.