[Terra] Pleasure to Burn: LUNA burn vs UST supply
Terra Q154: How much LUNA has been burned over the past 30 days? How has the supply of UST changed over the same time period? Display both of these, using visualizations.
The above chart illustrates that the amount of LUNA token burned to UST has fluctuated over the past month, from 46k to 1.14M per day.
How are LUNA and UST connected?
LUNA and UST are both tokens in the Terra blockchain.
UST is a stablecoin, which means its value is pegged to the U.S. dollar - its price is maintained at $1 (in practice with some minimal fluctuations).
UST is backed by and minted from Terra's other token - LUNA. So when a UST token is created LUNA is burnt, decreasing the LUNA supply, increasing the LUNA price, and increasing the UST supply and decreasing the UST price.
To maintain the price of UST, Terra incentivizes either the minting of LUNA tokens (to make UST more scarce and increase the UST price) or the burning of LUNA tokens (to grow the circulating volume of UST and therefore bring down the UST price).
Methodology
This analysis shows the amount of LUNA burned (specifically LUNA burned in the LUNA/UST pair a.k.a. LUNA destroyed to mint UST), and UST supply, daily over the past 30 days.
The comments are current as of the date of analysis (March 2, 2022), but the charts are set to auto-update daily to show the updated 30-day period.
The above chart shows that the UST supply has fluctuated between 12.3B and 13.4B in the past month.
Takeaway
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Over the month of February 2022, the burning of LUNA tokens increased, especially in the second half of the month.
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With this burn, the price of LUNA has soared, and the volume of UST has increased, as these two metrics tend to move side-by-side because of the way Terra economics is set up.
The total LUNA burned in order to swap for UST was 9.65M LUNA in the last 30 days.