What do you guys think differentiates DFI and luna? My

Question

DeFiChain - International

M

What do you guys think differentiates DFI and luna? My

thoughts are dfi dusd is also a somewhat algorithmic based stablecoin but the crypto pairs are backed 1 : 1 🤔

#blockchain #cryptocurrency #defichain #english

0

11.05.2022

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DanieL BaptistA

Absolutely everything. Luna and UST share a symbiotic relationship, in which Luna acts as a collateral and absorbs the short term volatility of UST, through it's logaritmic peg. Any user could therefore, freely exchange 1$ luna for 1$ UST. If UST = $1.1, users will be incentivized to swap $1 worth of LUNA to receive 1 UST. If UST = $0.9, users will be incentivized to swap 1 UST for $1 worth of LUNA. Meaning this, minting UST requires burning luna, and burning ust requires luna to be minted. Well, what happens if you lose peg and start minting a token that acts as collateral, but does not worth anymore a 1:1 porportion as it should? Well, you get this day today, in which luna entered a death spiral. With DFI, this does not happen, since DFI and DUSD are not pegged to one another and are completely decoupled. DUSD has a very specific usecase, same as DFI, and they do not cross paths on what they are meant to do in the ecosystem. Burning DUSD does not magically makes appear DFI out of thin air, while minting DFI does bot requires DUSD to be burned, they are completely separated in the ecosystem. Today separation of the organically established peg on DUSD is largely due to panic sell under uncertain market conditions, rather then a problem with a stablecoin that has absolutely no link, be it in design be it in utility, with something like UST. Sorry if it spunds confusing, I am tired today and wrote so much I might have lost myself halfway through 😂

0

11.05.2022

M Автор вопроса

DanieL BaptistA
Absolutely everything. Luna and UST share a symbio...

That was a great explanation, great job 👍🏼😇

0

11.05.2022

Spencer L

In a simple TLDR DFI is used to mint DUSD, but in the process it is not burned. Oppositely, DUSD is burned but DFI is not minted. Now in LUNA, I burn LUNA to make UST, and the opposite is true. So as people made UST they also pushed up the price of LUNA because supply fell. Now the reverse is happening, so much LUNA is being minted and being sold.

0

11.05.2022

~~~~~~ · Accepted Answer

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more focus on community building and less centralization

0

11.05.2022

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