Transcript: Prism Launch Q & A

Finn 0:42
Hello and welcome to The Ether. Today is Tuesday, January 18th 2022. This episode of The Ether is brought to you by Orbital Command, a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Take advantage of their Terra Luna Intel Report on Telegram which brings you the hottest news and updates on all things Terra. Find it by using the link in the show notes. You can also support their community efforts by considering them next time you’re delegating or redelegating your LUNA. Find out more at TerraSpaces appreciates their support. Today on The Ether we have the Prism Launch Q&A. Let’s take a listen.

RyanLion 1:21
Okay, cool. How many people we’ve got in here? Oh, we’ve got about 100 in. Okay. Cool. Everyone, welcome to Prism Spaces. I’m super excited to be here hosting this one. Remember six or seven months ago when Do first dropped the idea of p and yLUNA and splitting the yield and principal. And ever since then, there’s been a lot of hype and a lot of speculation about Prism protocol and what it’s going to bring to the Terra ecosystem. Personally, I think it’s probably the most exciting launch that we’ve had since Anchor Protocol. So absolutely delighted to be here today with MrRefractor himself, Hyperion, who’s hiding behind the Prism account today, and new Prism team member announced this week, Jimmy. So before we kick off, congratulations, Jimmy. Just kind of wondering, how did it come about that you joined the team, and what will your role be at Prism?

lejimmy 2:31
Hey Ryan, I think has been kind of a crazy week. But I remember it actually kind of started because, you kind of organized something with MrRefractor here, I think last summer, in the UK LUNAtics group back then, when Terra Bites was still doing their Friday happy hour, where we all kind of just jump in and just chat about nothing. And you had kind of just put together a little group for the UK LUNAtics. And MrRefractor came and started talking about Prism. And that’s when things really kind of started… The idea started marinating in my head, I started mixing and matching, connecting all the dots between Prism, some of the other protocols over on Ethereum, like Pendle, Element, and even shared some aspects with Alchemix. And now we have Kinetic Money on our side in terms of lossless… Not lossless, sorry, liquidation free leverage on your assets. Yeah, I think ever since then, I’ve just been following my interest and trying to create valuable content, and just filling in a void where where I saw necessary, just doing research, summarizing, making things simple and just putting it out there into the universe. I think the Terra community and LUNAtics just kind of reciprocated the value that they saw in the work that I did. And of course, all the folks over at GT, we’ve all been kind of masterminding and just trying to make sense and navigate through “making it” all together, right. And we’ve kind of just been there for each other. And MrRefractor has kind of just popped in and kind of been a part of that whole journey. So I think when the time was right, it was a kind of a… Almost like a natural move to join the Prism team.

lejimmy 4:43
Yeah, and then my role, I think, the only thing that really resonated me was the idea of just trying to attract that growth or TVL for the protocol, right. And it kind of allowed me to do all the things that folks kind of know me on Twitter for my persona, maybe it’s contributing data dashboards or helping folks make data driven decisions, maybe it’s simplifying some of the ideas and strategies into threads, maybe it’s creating these little short Loom videos, walking people through things, and behind the scenes just doing a lot of business development partnerships, and just trying to fit all the pieces together in the most valuable way for all parties. So that’s like a quick story on, I guess, how things organically kind of unfolded over the last year or so.

MrRefractor 5:39
You forgot to mention the memes.

lejimmy 5:41
Oh, yeah, the memes.

MrRefractor 5:44
No, I think, yeah, I mean from us, I remember you put together the TeFi calculator, and I was looking through it earlier on, and you’d kind of shown a big interest in the protocol anyway, straightaway and put it onto your TeFi calculator last summer. I think it really was just a case of, we we chatted, obviously, quite a bit about Prism over many months. And then it’s also just seeing people do stuff for the community. And just getting stuck in without an agenda, just trying to be helpful and useful. And it was obviously tons of different ways that you were contributing. Most recently with the sort of liquidity incentive proposals on Agora for Terra, but loads of different things you’ve done, obviously, for helping GT and then your community tools you’ve done for various launches, all the content you’ve put out as well. It seemed to make perfect sense to try and focus those energies towards Prism, given what good job, obviously, you’ve been doing with everything else.

RyanLion 6:56
I think I speak on behalf of the whole community when I say I think it’s a great pickup for Prism Protocol and good luck. Good luck, Jimmy. And so the purpose of today Spaces, obviously, is we’ve had the announcement just over a week ago in terms of this four phase launch process for Prism. So kind of want to spend some time talking through that today and just trying to kind of consolidate in everyone’s heads how that works. And then before we do that, I’d also like to spend a little bit of time on the Prism tokenomics. Because I think there’s been a lot of threads that have been really focused on how the different alphabet LUNAs are going to play out against each other. But maybe not so much focus on the token itself. And given that we’re talking about, at least in phase one and two, we’re talking about the token launch, I think it’d be worthwhile working through some of the tokenomics there. It’ll be a typical… It’s going to be an interview style Spaces, but we will have hopefully some time for questions at the end. So as we go through, if you do kind of think of a question, put your hand up and get in the queue for questions, and we’ll take them as we get towards the end there. So first and foremost, let’s talk about the PRISM token. And so what is the functionality of the PRISM token within Prism protocol?

MrRefractor 8:27
Yeah, so the PRISM token itself is going to be one side of every single liquidity pool. So at the start, we’re having seven liquidity pools. And that’s going to be PRISM versus UST, PRISM versus aUST, PRISM versus LUNA, PRISM versus cLUNA, PRISM versus yLUNA. PRISM versus pLUNA, and xPRISM versus PRISM. And xPRISM, I’ll get to in a sec. Ao the reason to have the PRISM token as one side of every liquidity pool is that means that we’re starting off with LUNA but as we refract more assets, like SOL, or ETH, or aUST, or LP tokens from Astroport, the maximum steps you’ll ever have to do to get from one token to another token, is two, because you’ll go from token X to PRISM, to token Y, so it serves a helpful utility like that. And that’ll also means that as we add more assets and TVL and the liquidity pools grows, then more PRISM is needed to be paired against those those new assets. So it kind of serves a utility function like that.

MrRefractor 9:44
And then additionally, you can take your PRISM token and stake it to get the xPRISM token. And the xPRISM token is a liquid token, and the liquid token is going to be… The best way to think about it on Terra is something like UST to aUST. So really what happens with UST is you deposit your UST into the aUST pool, and you get an aUST token in return. Now every day as rewards are collected by Anchor on the bLUNA, those rewards are deposited, those UST rewards are deposited into the aUST pool, and the value of your aUST token increases. And so xPRISM is a similar model to that, where every day fees are collected by the protocol, PRISM is then bought back from the open market off of these liquidity pools, and then those PRISM tokens are then dropped into the aUST pool. So you never need to claim your PRISM tokens, because really, you just have an asset that’s increasing in value like the aUST token. And what the xPRISM token does is when someone puts LUNA into Prism, the LUNA is staked in the background and starts accruing staking rewards that you would normally get with LUNA. And so those staking rewards then go to yLUNA holders, because when you stake your LUNA into Prism, you receive yLUNA and pLUNA. And so what happens with the PRISM token is 10% of that yield from yLUNA tokens that are staked in Prism is converted to PRISM tokens and distributed to the xPRISM pool. And then for yLUNA tokens that aren’t staked in Prism, so say for example, in the liquidity pools, or people are just using them to sort of hold in their wallet or speculate like a lot of people do with LUNA, 100% of that yield goes to xPRISM holders.

MrRefractor 11:57
And so another source of revenue on the protocol is, is that because Prism has its own AMM, whenever there’s a swap executed, so say someone swaps PRISM to UST, or yLUNA to PRISM, there’s a fee collected by the protocol the same way that you do on TerraSwap, or the same way that happens on Astroport. And so part of that swap fee goes to xPRISM holders again. And then the fourth different fee that Prism collects is, Prism is going to allow you to leave limit orders. So you could deposit aUST and you could leave a limit order to buy LUNA in case the price dipped. And if you ended up doing that, then if the order is successfully executed, a fee will be collected of 0.3%, and that will be converted to PRISM and dropped into the xPRISM contract. So I guess in summary, you have four different ways. 10% of the yield of yAssets that are staked, 100% of the yield of yAssets that aren’t staked, 0.1% of any swap that occurs on Prism swap, and 0.3% of any order that’s successfully executed. Those are the things that go to xPRISM. And as xPRISM is also a liquid token, like aUST, rather than a illiquid staked token, you can then also use xPRISM in the liquidity pool I mentioned earlier. So you could be a liquidity provider in the PRISM-xPRISM pool. And people have seen examples of this with, say, the LUNA-LunaX pool at the moment. And you could also potentially lend out PRISM tokens, or xPRISM tokens, or use xPRISM as collateral like we’ve seen with LunaX in Mirror Protocol, etcetera. And because it’s a liquid token, that means it can go cross-chain, it can be used in other protocols, and all the time it’s still accruing rewards, because it’s a compounding token. Hopefully that gives a bit of an overview.

RyanLion 14:06
Yeah, that’s pretty thorough. And really interesting to hear about all those different value accrual methods. I think one of the things that we’ve seen on Terra for the protocol tokens is kind of maybe a struggle to accrue value to the token. So some really interesting methods there. I think those different value accrual methods link back to the analysis tool that you’ve put together, right, Jimmy? I don’t know if you want to talk to that briefly.

lejimmy 14:38
Yeah, folks can find it on my pinned tweet, and I can kind of share it here in a second on the Space. But I think the most surprising thing to me, when building that tool and kind of just challenging myself that I understand all these different value accrual methods and placing some assumptions against it, is that the idea that 100% of yLUNA, 100% of the fees from unstaked yLUNA or yLUNA in these pools are going back to xPRISM stakers. That’s quite incredible actually, because the value of crural for staked yLUNA is only 10%, so that just means that it’s literally 10x, right, 10x the value crural for just a small majority. If you believe a small majority of yLUNA is not going to be staked, that small percentage of yLUNA that is unstaked can generate more fees to the protocol than all of the other yLUNA that’s being staked. And this same idea propagates towards all future tokens and all future yield LP tokens that could ever possibly be introduced onto the platform. So I think that’s just an incredible, I guess, new idea that we’re being exposed to for the first time on Terra, and just a simple little switch can increase the value accrual for a token over… Yeah, well, quite a large magnitude.

RyanLion 16:29
Yeah, if anyone hasn’t seen that tool, I think, Jimmy’s put a link up at the top of the Spaces here. And I think you’ll find it in there if you want to go and have a play around with the different parameters there.

MrRefractor 16:41
Yeah, I think there’s a… Jimmy’s posted the link there. And Jimmy’s done a tool, and then there’s also a… The tool allows you to fiddle around and put your own values and your own estimates in and see what what kind of fees get spat out. And then I think there’s also an article by LUNA Evangelist, who’s done a medium article kind of looking at a breakdown of all the different potential fees and what that could look like. So if you haven’t got the opportunity yet, maybe that Notion site that Jimmy linked to is a good resource.

RyanLion 17:19
Cool, I think we covered most of the token value that I wanted to cover there. I think the only functionality of the token that we’ve maybe not covered, particularly at launch, is probably the governance side of things. So I presume that the xPRISM holders will be essentially the governance of the protocol. What sort of proposals do you expect, xPRISM holders to be voting on as the protocol matures?

MrRefractor 17:53
So I think there’s going to be some stuff initially that I think is really interesting. And then there’s some stuff in the future as the protocol starts accruing assets that is going to be even more interesting. So I guess to start off initially, you’re going to be looking at things like liquidity incentives. Because we’re running our own DEX people are gonna vote for which assets get listed on the DEX. So we’re not going to… It’s to avoid a situation where we get too many Dogecoins listed on the DEX. Everything’s gonna have to get approved by xPRISM governance. Key parameters around fees that the protocol charges are going to get voted on by governance. So all those kind of usual things, like community grants, community funding proposals. And then on top of that, there’s also an interesting angle where as Prism ends up getting more and more tokens, let’s say, sort of governance tokens get refracted in Prism, Prism’s actually going to start accruing voting power in these governance tokens. And there’s a chance if Prism reaches that scale, then in the future xPRISM will be able to vote on some of these governance tokens, say for example, we refracted Anchor token or we refracted Mirror, xPRISM might be able to vote on that in a similar method to Convex and Curve at the moment. I think also, xPRISM tokens are gonna vote on who the validators are. So we’re going to democratize that. We have a shortlist at the moment, and then in the future the xPRISM community will get to decide which validators are providing the most value to Prism Protocol. And so they’ll get to vote on things like. So it’s intended that all major decisions basically are taken by experts and governance holders.

RyanLion 20:07
Interesting. And just one last question, actually, since you mentioned the Curve Wars there that are going on over on Ethereum, do you envisage a ve, a vote escrow PRISM, like a time locked PRISM in the future?

MrRefractor 20:23
Yeah, I think, again, it’s on the roadmap. And it’s something that I think is very interesting and has very positive value accrual. And I think that if xPRISM holders want it, I definitely think that’s something that we would look to do, because I think it’s a really interesting model and it seems to be working very well for Curve.

RyanLion 20:48
Cool, thanks guys. So a little bit on the tokenomics there, and if anyone else wants to come in at the end and ask any follow up questions, please do raise your hand as we get towards the end of the launch discussion. So onto the launch. So we’ve got this four phase launch, that’s coming up starting on the 25th of January, phase one, you’ve termed Prism Forge. Now, I think my understanding is that this is… There was a previous announcement that this Pylon Scout launch model, I think that this is the same thing rebranded, but being hosted by Prism. So maybe you can fill us in on that. I guess, when and where is Forge taking place, and tell us a little bit about how it works?

MrRefractor 21:38
Yeah, of course. So originally, I guess, we were trying to look at fair launch methodologies. And we spend a lot of time looking at liquidity bootstrapping pools, we had a bit of a look at things like reverse dutch auctions. And then we saw the Mango Markets launch on Solana. And that seems like a really great method where everyone chooses the price, there’s no time advantages, bots can kind of front run you. And so you end up having this situation where it feels a lot fairer. And it feels like it solves a lot of the issues that were happening with some of the other launches that we’ve seen. So ultimately, the most important thing about this is, everyone’s going to get the same price. And everyone will have plenty of time. And you’re unlikely to have a situation where you have huge network congestion that we’ve seen on some other fixed price swap events or initial DEX offerings. And so we were looking at… We built the smart contracts for this and liked it. And we were looking at partnering up with Pylon on it. Obviously, Pylon has had a lot of changes since and is doing amazingly well. And so I think for simplicity, it made most sense to reevaluate and launch from our own webapp. And then obviously, in the future, there’s an opportunity for lots of partnership with Pylon, particularly as it relates to them using yLUNA to allow people to do yield swaps for new protocols using yLUNA rather than UST. So that’s kind of why we ended up launching on our webapp. And so the way that Phase One is going to work is basically…

RyanLion 23:40
Jimmy, did we lose Hyperion?

lejimmy 23:43
Yeah, we certainly did.

RyanLion 23:46
Are you able to take over from where we lost him there?

lejimmy 23:51
Yeah. So I think MrRefractor here was about to go into Phase One launch, right?

RyanLion 23:59
Yeah, that’s right.

lejimmy 24:00
Okay, cool. So for Phase One, we’ll have five days in total for the first phase. So for the first four days, you’ll have unlimited time… Well, you have unlimited opportunity to deposit and withdraw as much UST as you’d like. There’s no time advantage here. You have plenty of time in the first four days. You can kind of just gauge the number of deposits, you can gauge folks withdrawing and you can really mull over and sleep over how much UST you actually want to contribute over many nights. And then on the final day, the amount of UST that you’re able to withdraw decreases by every hour. And you will only be able to withdraw UST one time. That’s really important. So we definitely took some inspiration from the Astroport Lockdrop. And we want it to be as simple as possible. And at the same time disincentivize any whales that might be trying to manipulate the price, right. We studied the Mango Markets launch, and I think the biggest feedback or the biggest pain point that folks had was that there were whales that were depositing huge amounts of UST with the intention at the very last moment to withdraw the majority of their UST right, so they would essentially spook away some of the smaller players. But by implementing this for the last day, where the longer you wait, the less UST you’re able to withdraw, and the fact that on the last day, you can only withdraw your UST one time, that should disincentivize any price manipulation towards the very end. Yeah, so I think that’s Phase One of the four part launch in a gist.

RyanLion 26:00
Yeah, I remember when I first read about Pylon Scout and that was before there had been any liquidity bootstrapping pools, it was before we’d seen the Astroport launch, I wasn’t particularly personally familiar with how the Mango Markets launch went. So… Hypherion, big yikes.

RyanLion 26:17
Can’t apologize enough. Sorry.

RyanLion 26:31
I thought that was… I’m hearing feedback from you as well. I thought that if you had something else to… Didn’t break. But there we go. Okay, I’m just gonna pick up from where we were, which we were discussing in Phase One of the Prism launch, I was saying how, initially, I found the idea really daunting, and wasn’t familiar with this type of launch. But I think the more that I’ve looked at it, the simpler it is, right. And just to put it in layman’s terms, for all the other smooth brained LUNAtics in here like myself, so Phase One is going to be 70 million PRISM on one side that’s sat there waiting to be bought. And anyone who wants to participate can deposit UST into the vault. And essentially, that 70 million will be split between the amount of UST that’s in the vault. So in the situation where, for easy sake let’s say, there’s 70 million UST deposited into the vault, then each PRISM will be valued at $1. And you’ll receive, say you put $100 into the vault, you’ll receive 100 PRISM at $1. I think that’s my understanding, right? Is that a fair assessment?

MrRefractor 27:51
Yeah, exactly. So it’s super simple like that, everyone gets exactly the same price. I’d say, hopefully, the Medium article we put out gives a good overview. And also, shout out to danku, who’s done a brilliant video and Twitter thread on it, which you’ll find, obviously, on his account, or you can go to the Prism Protocol Notion site as well.

RyanLion 28:17
Yeah, absolutely. I watched that video, great video, danky, as always. And then, I guess, the other thing is that you’ve just got this one day, similar to how Astroport had the Lockdrop and then the withdrawal phase, you’ve just got this kind of 24 hour window that if anyone feels either… They may feel tokens are overpriced, or they may have to commit their funds elsewhere, they’ve got that 24 hour window to remove that’s kind of is a sliding scale in terms of how much you can withdraw over that 24 hours, right. And is that right?

MrRefractor 28:53
Yeah, exactly. And I think I caught Jimmy mentioning it earlier on. That was obviously successful with Astroport. And one of the things with these launches on Solana where there wasn’t a stepped down period was that larger participants or whales were leaving it until the very last moment to withdraw surplus UST that they never intended to spend, or USDC in that case, and sort of crash the price lower. But because there was large amounts of USDC in there before, that had put off a lot of people from participating. So by having this step down method, you avoid a situation where people can wait until the last few blocks to withdraw all the surplus UST that’s been used to kind of dissuade people from participating.

RyanLion 29:47
Yeah, I think that was one of my initial fears. And I definitely think that the steps that you’ve put in, I think will protect against any silly business in Phase One that leads through to Phase Two, like you said, that could happen with that pure Mango Markets launch strategy. So phase one takes part over those five days starting the 25th of February and the four days of unlimited deposit withdrawal, and then that 24 hour withdrawal period at the end. So after that’s finished, I think we go into Phase Two. And if I’m right in understanding, maybe you can just explain Phase Two is essentially the launch of Prism Swap, as in your AMM, but it’s just the PRISM and UST pair that’s going to be launched.

MrRefractor 30:44
Yeah. So we’re going to see the liquidity pools and then people will start being able to swap PRISM for UST or vice versa. I think the important thing here for people is, there are no airdrops, or there’s no VC tokens, there have been no VCs, and so there’s no tokens generating from anywhere else that can be sold in that initial Phase Two, beyond the people that bought in Phase One. So everyone who participates in Phase One in Prism Forge has made an active choice to buy PRISM tokens rather than being a passive recipient, like an airdrop recipient for an example. And so therefore, the only people that can sell PRISM tokens in Phase Two are going to be people that have already chosen to actively buy. So it should help hopefully result in a fair launch on the DEX, where you’re not going to see huge spikes, and people that bought in Phase One are able to kind of add to their position or hold, and it can only be them that could be sellers.

RyanLion 31:59
Okay. And so going into Phase Two, if I participated in Prism Forge in Phase One, I would have the full amount of PRISM that I bought going into Phase Two? And if so, do I also have the opportunity to add liquidity to the pair if I wanted to? And will there be any incentives on that pair?

MrRefractor 32:22
Yeah, exactly. So you are going to… I guess, it’s been good to be able to learn from other launches on Terra. And so you will have… 100% of the tokens from Phase One will be released to people that participated in Phase One. And the reason for doing that is to make sure that we don’t have any large unlocks or large cliffs, so we’re not releasing 25% initially, and then another 75% later on. So people don’t have to be worried about a large event. And so you’re going to get 100% of your tokens, you’re going to be able to be a liquidity provider, if you then want to combine your tokens with UST to be a liquidity provider. And the intention is you’re going to be able to stake your liquidity provider tokens to earn liquidity incentives.

RyanLion 33:18
And just in terms of… How deep will the liquidity be that’s been provided by the protocol? Have you set any parameters around that yet?

MrRefractor 33:27
Yeah, we have amounts we’re targeting. The intention is to provide pretty deep liquidity at the start, so that the protocol doesn’t… Again, learning from experiences of others has been beneficial. And so we don’t want to have a situation where we’re firing out hugely inflationary liquidity incentives that people are gonna take profits on. And so we want to provide very deep liquidity and moderate liquidity incentives. So it’s not a huge farming pair, but it’s still lucrative for people who want to provide liquidity.

RyanLion 34:07
Make sense, thank you. Okay. I think Phase Two seems pretty simple. Now I think… Sorry, just before we do move on, have you got a date fixed in for Phase Two? Do you expect that you’ll be going straight out of the Forge into the Prism Swap in Phase Two, or will there be a time period in between?

MrRefractor 34:27
So the intention at the moment is to start Prism Forge on the 25th of January at 7am UTC, which would mean that Prism Forge would finish on the 30th of Jan, I want to say at 7am UTC. And so the intention then is to roll very quickly on to Prism Swap, so either the same day or a day later or something like that is the plan. And we probably will announce when we’re going to… We’ll probably announce, when we’ve launched Prism Swap after the fact. So that people can’t time it, and so that it’s kind of a fair launch where, again, you’re not having network congestion or everyone queuing up to buy at the same time. So that’s when it’s kind of estimated to launch.

RyanLion 35:20
Cool. Makes sense. And then we roll into Phase Three, which I think is the real…

lejimmy 35:26
Hey, Ryan?

RyanLion 35:27
Yeah, hi.

lejimmy 35:28
I kind of just add real quick that… I just want to draw comparisons to and differences to Astroport, Phase Two of their Lockdrop. I think some folks were confused in the Discord where they thought that for Phase One or for Phase Two of Prism that they’d be getting some LP tokens back. But I just wanted to confirm and reiterate that for Phase One of… For Prism Forge, you’re depositing UST and you’re getting PRISM tokens back, you won’t be getting any UST back, and you won’t be getting any LP tokens back.

RyanLion 36:08
Yeah now, you mentioned it, I have seen that question pop up a couple of times. So thanks for stepping in and clarifying, Jimmy. So yeah, as I say, after Phase Two, after the PRISM-UST swap opens, we’ll be rolling then into Phase Three, which is the bit that we’re all excited about. And this is the part where we can start finally refracting LUNA into the infamous yLUNA and pLUNA. I think before we go into the functionality that’s going to be available at launch, mnd my understanding is that you are going to be launching on testnet before the full launch. I ust wanted to understand, A, kind of, again, when you anticipate that happening, and why you’re doing the test at launch before rather than just going straight into a mainnet launch.

MrRefractor 37:01
Yeah, I think the thinking behind that is, this is going to be a new concept for people, you know, splitting their tokens up and it’s going to be something new for me when it fully goes live as well. So I think it’s going to be really good for people to be able to have a play around with it on testnet, and practice it free of any worry that they’re actually doing something with their LUNA that they’re not quite sure what they’re doing. So the reason to open it up on testnet is to let people get themselves some testnet LUNA tokens, practice refracting them, practice putting them in one of the liquidity pools and let them familiarize themselves with the web app. And then once people have done that for a little bit, we’re going to turn on the full functionality and go to mainnet. And the plan is that that’s going to be a couple of days of testnet and then mainnet. And then people will be, for the first time ever, able to actually refract their LUNA into yLUNA and pLUNA.

RyanLion 38:08
I think you’ve got that estimated to start, I guess, maybe the testnet’s starting around the 4th of February, are you still feeling confident that you’re going to hit that deadline?

MrRefractor 38:23
I was until you asked me that. [chuckle] No, I feel like we’re definitely still looking to hit that deadline. We want to have… The plan is too… Because once mainnet launches, that’s when people can stake their PRISM tokens and start earning protocol fees. And so we want to have a smaller gap as possible between people buying their PRISM tokens in Prism Forge and actually getting to use their PRISM tokens in all seven liquidity pools, getting to try out leaving a limit order, and getting to use their xPRISM token to start earning protocol fees. So we’re very focused on making sure that we keep that gap as small as possible for people whilst still giving them the opportunity to practice refracting on the webapp before the full mainnet.

RyanLion 39:13
Yeah, I think there’s definitely been some community frustration with the launches where there’s maybe a significant delay between the token actually being released, and then it having any utility. So I think that’s admirable that you’re aiming to get utility around the token within, hopefully, kind of 10 days to 2 weeks by looking at these timeframes. So that’s ambitious and fingers crossed. You mentioned there a few of the activities that people will be able to undertake when the webapp goes live. Do you want to maybe just talk through maybe the functionality that’s going to be available, what people will be able to do, I guess, in particular with their yLUNA, with their pLUNA, and with their PRISM?

MrRefractor 40:04
Yeah, so you’re going to be able to take a LUNA token and put that in the PRISM vault and effectively get yLUNA and pLUNA back in return, you’re going to be able to then take that yLUNA and put it into one of the staking contracts and start earning your LUNA yield and airdrops. I guess a quick note on that is, if you have LUNA in Terra Station staked, then you receive your rewards some in Terra stablecoins, so UST, KRT, etcetera, some in LUNA, and then obviously you get your airdrops… What Prism is going to do is it’s going to take the Terra stablecoins portion of that and convert it to LUNA. Then it’s going to combine that with the other LUNA that you receive as part of your staking rewards and use that to mint you yLUNA and pLUNA. And then that’s going to get distributed to yLUNA holders alongside their airdrops, so their Anchor airdrops, and their Valkyrie airdrops, for example. So that’s what you’re going to be able to, practice doing if you stake your yLUNA… And the advantage of that is you’re effectively DCA buying LUNA with your Terra stablecoin portion of your awards. And that was kind of a highly requested feature from people. And so you’re going to be able to refract your LUNA, you’re going to be able to stake your yLUNA, you’re going to be able to be a liquidity provider. So you can take anything of yLUNA, pLUNA, cLUNA, LUNA, PRISM or xPRISM, UST or aUST, and be a liquidity provider in any of the seven liquidity pools. And then as we just spoke about, you’re going to be able to take your PRISM token, and you’re going to be able to put it into the xPRISM pool and receive an xPRISM token in return. And that xPRISM pool is going to start getting paid fees that the protocol eards that we mentioned earlier on. So the portion of the yield of assets in the vault, limit order fees, and swap fees on the AMM.

MrRefractor 42:16
And the limit order fees, that’s going to be another functionality that you can plan to do during Phase Three is you’re going to be able to leave a limit order, and one of the features we’re excited about is that you’re going to be able to leave a limit order in aUST to buy LUNA. So you can leave an order for as long as you want in aUST knowing that your aUST is still working for you at 20% yield. And you’re going to be safe in the knowledge that if LUNA wicks down or whatever, you’re going to be able to have a limit order that buys you cheap LUNA or if there’s an event that goes down beyond your limit price, for example. So those are the main functionalities that you’re going to have when mainnet goes live. Jimmy, correct me if you think I’ve missed out on anything, but I think those are the main ones.

MrRefractor 43:05
Yeah, I think for value accrual as well, these limit order bots… I think right now the only way that we can do that for most of our coins is either going through a centralized exchange that might have limit orders, Kujira kind of helps us buy bLUNA and bETH during liquidation events. But these limit orders will allow us to do this for all the pairs on Prism Swap. But hopefully we can extend this to other pairs and other DEXes in the future. And all of this value is just being accrued back to xPRISM stakers.

RyanLion 43:53
I have to say, I’m really excited for limit orders on Terra. I think it’s something that’s definitely been lacking in terms of functionality. Although, I guess that’s just the nature of decentralized exchanges. Just, I guess, a question of interest from me, often when you see these big wicks down, they’re often bought up very quickly by bots. Do you expect that limit orders will be hit versus the bots? Will there be some competition there? How do you think things are gonna work?

MrRefractor 44:28
Yeah, so the way we’ve done it, there are some other limit orders sort of iterations on Terra. And I think one of the sort of feedback that we’ve heard from people is that their target price will be reached, or it’ll go well through their target price, and the order won’t be executed in time. So the way that we’ve built the limit order contract for Prism is that there’s going to be an element of profit built into it for the person that actually… You need an asset external bots to execute the limit orders. And so we’ve introduced an element of profit for external bot operators so there’s going to be lots of people competing to execute your orders. So if you have a wick down, there’s going to be lots of bots competing to execute. And so we anticipate that that’s going to give people much faster and much better execution at exactly their limit price.

RyanLion 45:25
Interesting. It’s going to be, it’s gonna be really interesting to see how that plays out for sure. I think we’re going to move through to the final phase, Phase Four. If people do have questions that they’re sitting on, now might be a good time to throw up a hand. Because once we finish Phase Four, we’ll be opening to audience questions. So Phase Four is essentially what we call, I think, Prism Farm, which is a really interesting concept. So it kind of reminds me of Pylon Pools a little bit, right. It’s kind of lossless farming of the PRISM token, do you want to talk to that?

MrRefractor 46:08
Yeah. So I guess very similar… People will be familiar with Pylon Gateway, people will be familiar with maybe the Apollo community farming event. And so it’s similar to that, you will take your yLUNA once you’ve refracted it, and you will deposit it into the yLUNA single sided farming contract, and you will still be swapping your yLUNA yield for PRISM tokens. And we put 13% of the total supply to be issued linearly over a year block by block, and so you will be able to participate in the farm. And the other things that we’re doing that are maybe slightly different to some of the other iterations that people have seen is each Prism token you earn will be claimable 30 days later. So there’s no extremely long vesting periods. And you’ll be able to take your yLUNA in and out of the farm at will without any protocol-applied exit fee. So you’re going to be able to liquidly use your yLUNA into the farm and you can kind of dip in and dip out as you want. And there’s going to be 30% of tokens issued linearly over a year with a 30 day vesting period on every single token you earn.

RyanLion 47:28
Okay, interesting. So I can throw some of my yLUNA into one of these farms, sounds like I’m giving up my the staking yield that I would earn in return for PRISM tokens. And so if let’s say it was running today, if I was farming PRISM today with my yLUNA, I would then receive those PRISM tokens that I farmed today, in 30 days time. And similarly, with the ones that I farm tomorrow would be 30 days from tomorrow. Is that how that vesting schedule works?

MrRefractor 48:03
Exactly, exactly.

RyanLion 48:05
Okay. And in terms of the price that I’d be farming at, it sounds like rather than farming at a specific price, essentially the PRISM tokens are distributed per block, and proportionally to everyone who’s in that yLUNA farming contract, is that right?

MrRefractor 48:24
Exactly. So because the PRISM token will already be trading by that point, and PRISM will already have a price, it’ll be similar to, say, Pylon Gateway for the MINE token, or for Nexus or something like that, where the yield number you’re getting is a live yield number because there’s a live token price. So you’ll be able to see exactly what yield you’re getting and whether you want to deposit your yLUNA into the farm and get that yield.

RyanLion 48:56
Amazing. And do you see yLUNA farming being a… Maybe an alternative launch method for further projects?

MrRefractor 49:07
Yeah, I think we’ve… I know for me personally, I haven’t participated in too many Pylon pools just because I want to make… If I have assets, and I’m fundamentally bullish LUNA, I want to hold on to my lunar exposure rather than depositing UST into Pylon when I could be using that UST to buy LUNA instead. So I think we’ve definitely been speaking with Pylon obviously, and we’ve been speaking with other protocols who have indicated that they’re really interested to allow people to swap yLUNA yield for protocol tokens because that allows the participants to keep their full LUNA exposure and have that working for them while still farming tokens in new protocols. So I think White Whale also made announcement that once yLUNA’s farming is live, that’s something that they definitely consider as well. And there’s others we’ve spoken to as well that are keen for it. So I think it should, I think it should be pretty popular, hopefully,

RyanLion 50:14
I think in this particular case as well, the ability to dip in and out of that pool as and when you like as well will probably make it pretty popular as well. And I’m just looking at the medium here. So you’re planning on going live with Phase Four, which is the final phase in and around the 9th of February. So I think that pretty much is about two weeks from the start of Forge on the 25th of January through to the 30th, and we’re hoping to go with Prism Swap, PRISM-UST as Phase Two around the 30th of January, hoping to start the testnet on the protocol right in and around the 4th of February, and then hopefully that goes through to the mainnet. And then the yLUNA farming will start in and around the 9th of February, is that right?

MrRefractor 51:09
Exactly. And so the aim of having the yLUNA farming at the end, and after a couple of days, or a weel of mainnet is to allow people just to have practice and make sure they know how to refract LUNA into yLUNA and pLUNA. The way these pools work sometimes is you have incredibly high APR at the start as people aren’t aware of the pools. And also to that extent it benefits sophisticated users over newer users because they have to perform… Converting your LUNA into yLUNA and pLUNA is going to be a new action for lots of people. And the more crypto native people will easily be able to do that and capture high APRs if we launched everything together. So by giving it a little bit of time for everyone’s practice before we launched the yLUNA farming, it’s gonna give everyone a much fairer chance to get in and get those high APRs at the start.

RyanLion 52:12
Cool. I’m about to… We’ve got BNardo up here on stage, we’re about to flip over to questions. Before we do, Jimmy, is there anything that you wanted to add, or Hyperion, anything you wanted to add there based on what we’ve talked about?

lejimmy 52:25
I mean, I’d love to jump into a bunch of other stuff. But I know that people have questions on the launch.

RyanLion 52:29
No imagining today, Jimmy.

lejimmy 52:31
Yeah, no imagining today. I’ll save that for when I jump on danku’s YouTube later.

RyanLion 52:37
BNardo, do you want to jump in with your question?

BNardo 52:40
Yeah, absolutely. Thanks a lot. This was great. Appreciate the overview. This is a newer protocol, it’s taking me several reviews just to make sure I understand all the components and looked at danku_r’s video yesterday, so it was very helpful. But one question I had just in terms of the rollout, just want to make sure I’m tracking, Phase Two, we’ll get the PRISM tokens, we can add UST to basically create a liquidity pool with the PRISM tokens. Will we then be given xPRISM? And will that just continue to accumulate while the testnet is going on, so that once it goes live we’ll have those x tokens that will then be able to accrue fees from the yLUNA that’s being formed?

lejimmy 53:37
Hey, BNardo, yeah, I heard you. I think MrRefractor might have some issues. Yeah, if he’s having issues I can try…

MrRefractor 53:47
My phone can’t seem to handle Twitter Spaces for some reason. No, that’s a great question. So in Phase Two, you’re going to get all your tokens from Prism Forge, and then you’re going to be able to be a liquidity provider if you want the staking functionality, so depositing your PRISM tokens into the xPRISM pool is something that’s getting enabled during Phase Three. So Phase Three is where you’re going to be able to start accruing fees and yield from the protocol. And so Phase Three is where you’ll be able to use your PRISM to mint xPRISM, effectively.

BNardo 54:30
Okay, no that makes sense. I mean, I think it’s a great staging, and it definitely… Well, hopefully prevents the sell pressure that seems to take place with the new launches. There’s more incentive to really let the various phases play out so that you can really participate fully. So this was great. Thanks a lot.

MrRefractor 54:52
No worries. I mean, on that point, I guess I’ll kind of reiterate because there’s no airdrops and because there’s no very low price, fixed price swap, you theoretically shouldn’t have the same kind of selling pressure that you see sometimes after launches on other protocols because a lot of people are sat on very high unrealized gains, or there are airdrops that passive participants have received that didn’t actively go out to buy the protocol, or there are VC tokens released at the token generation event. So, we’re hopeful that this is going to create a sort of fairer, smoother launch where the only people that control the token price downwards in Phase Two would be people that have bought in Phase One. And given they’ve made the active choice to buy or participate in Prism Forge, you would hope they’re taking a longer term view on the protocol.

BNardo 56:04
No, that makes sense. Fingers crossed. Thanks again.

RyanLion 56:07
Thanks for the question, BNardo. I think we’ve got Mahesh up here with a question. I don’t have anyone else lined up. I think there’s about 250 people in here. So if anyone does have a question, it’s a really great opportunity to ask Hyperion and Jimmy here.

Mahesh 56:21
Hi, I’m Mahesh. I just have a question about… To my understanding, we have to put LUNA in the Prism vault and then get cLUNA and then pLUNA and yLUNA. But how do I get my LUNA out of Prism vault? Do I have to give pLUNA and yLUNA to get my LUNA back from the Prism vault?

MrRefractor 56:44
Yeah, great question. So it’s going to be very similar. I don’t know… I think a lot of people on Terra are familiar with when you deposit LUNA into Anchor you get bLUNA. Well what really happens in Prism is when you deposit LUNA into Prism, you get cLUNA, which is your collateral token, which represents your ownership of the LUNA that you just put into the Prism vault. And then that cLUNA is what you can refract into yLUNA and pLUNA and so yLUNA and pLUNA can be merged to give you a cLUNA back and then with your… Sorry, say that again?

Mahesh 57:24
So to get cLUNA I have to do equal amounts of pLUNA and yLUNA, right?

MrRefractor 57:29
Exactly. So you would you would do… So basically you’ve got… Say you’ve split your LUNA and you’ve got now, say you’ve got 1 pLUNA and 1 yLUNA. You have several different choices if you want to get back to LUNA. You can either just swap your pLUNA for LUNA, and your yLUNA for LUNA on the AMM. The next choice is you could merge your pLUNA and yLUNA, so 1 yLUNA plus 1 pLUNA is going to give you one cLUNA and then once you’ve done that and you have your cLUNA, you have the same two choices that you have on Anchor Protocol. You can either start the slow unbonding period, which starts LUNA’s native on staking period, or you can swap your cLUNA for LUNA on the AMM, the same way that you do with bLUNA to LUNA on the AMM that people are familiar with. So you’ve got multiple different choices, basically, to get back from pLUNA and yLUNA to LUNA.

Mahesh 58:29
Okay, okay, thank you. That answered my question.

MrRefractor 58:33
No worries.

RyanLion 58:34
Yeah. Thanks, Mahesh. I think that’s probably a question that lots of people have in terms of like, “Okay, once I’ve got all these different alphabet LUNAs, how the hell do I get back to native LUNA? I want to get there.” So thanks for the question. Jimmy, were you about to add something there as well?

lejimmy 58:48
Yeah, I think, if folks here have participated in Nexus Protocol don’t know that they can put bLUNA inside the LUNA vaults at Nexus, and you’ll get a receipt token back as nLUNA. So here, it kind of works the same way where you’re putting in LUNA and you’re getting back a cLUNA. And I think from what I’ve played with on the testnet, we kind of abstract away a bit of that. So if you’re depositing LUNA you probably want the p tokens and the y tokens. And of course, when everyone gets a chance to play around with the testnet, they’ll get a chance to refract and remint all their tokens. And I think if folks knew what was going on behind the scenes and kind of understood that these market forces will create various prices for nLUNA, bLUNA, regular LUNA, LunaX and all these different LUNAs such that a lot of arbitrage opportunities will exist. And I think just to bring it back to the point earlier for Prism Swap and the value accrual of xPRISM, is that more trading activity that we have the more value that’s being accrued and generated back to xPRISM stakers.

RyanLion 1:00:13
Yeah, I think the arbitrage opportunities, and I think Hyperion is going to be spending some time talking to Cephii on Thursday about that. So make sure you tune into that to understand a little bit more about those arbitrage opportunities. Think 0xn00b, the Terra degen is next up with his question. I hope that his question matches his name.

0xn00b 1:00:40
I hope as well. Thanks for organizing this. Everything sounds smooth and well thought. I have a question about the Phase One. So you explain this concept of preventing whales of manipulating the price at the very end of the phase one. But can you explain why does it make sense to put a cap on the amount of UST that you can initially deposit to the vault in the Phase One?

MrRefractor 1:01:17
Yeah. So just to clarify it, so there’s no limit on the amount you can deposit in the first four days. So it’s a five day process, Prism Forge. There’s no limit on the amount of UST that you can deposit, say, in the first four days. And on the fifth day, the amount that you can withdraw, similar to Astroport, decreases linearly once per hour for us until you get to the end of day five. So for the first hour, you can withdraw 96%. For the next hour, you can withdraw 92%. So that kind of allows you a process where on these launches on Solana, what you ended up having was, say, a whale wanted to buy 10 millions worth of the tokens. What you’re having a situation was whales were putting in, say, $50 million pretty early on in the first phase of it. And that was deterring people from participating because it made it look like the token was going to be extremely expensive. And then what happened in the very last seconds of the last stage where there wasn’t any cap on how much people could withdraw was that the whales were then waiting to the very last minute to withdraw the $40 million excess that they deposited, so that they only still had the original $10 million that they wanted. And by doing that they put off a lot of people from participating. So that’s why we’ve taken these measures. And I think we watch very carefully community feedback after the Astroport launch. And people were really extremely positive about this similar method on the Astroport launch for the final day, or for the final two days as it was for Astro. But it’s going to be one day for us. And so that’s what we’re trying to do, because we hope it’ll have some familiarity for people. And it seemed to work well for Astroport. And feedback seem to be very positive from people that it was a fair way of doing it.

RyanLion 1:03:35
Does that answer the question, Mr. n00b?

0xn00b 1:03:39
I still didn’t get the answer about why not limiting the initial amount of UST? I mean,

MrRefractor 1:03:49
Oh, sorry, your question is why did we not provide a cap? Oh, I guess my thoughts on this are, it’s hard to find the right level for people because $10 to one person might be an extremely material amount, and $10 million to another person might be an extremely material amount. So we wanted to… And the other aim of this is to find a fair market price for the token so that we can list it without any large initial spikes. And so that people, the community, gets to set the price. And if you restrict people on how much they’re allowed to deposit, then you won’t end up with a fair price and the community won’t decide the price and you’ll end up with these token spikes or kind of other issues that can be not beneficial for people, or for protocols as well. So that’s kind of why we haven’t restricted it.

RyanLion 1:04:58
I think from my perspective, right, if someone wants to put $10 million in, and they’re happy that they want that amount of PRISM, they’re going to get that PRISM at the same price as someone who’s going to put $100 in, right. So they don’t really get much advantage by putting a large amount in there, they’re going to be buying at the same price as everyone else.

MrRefractor 1:05:25
Yeah, exactly. And I’d also add, there are measures you can put in place. But ultimately, if you restricted the amount, people are just going to create multiple different wallets, and they’re just going to buy with multiple different wallets. And then you start going down the road of whether you then need to start whitelisting wallets, etcetera. And it adds a lot of complexity and doesn’t end up in fair participation for everyone, basically. So that’s kind of why it made sense. And similar to Astroport, they didn’t have a cap and same for these launches on Solana. And feedbacks been really positive, these tokens will end up finding a fairer market price. And so I think it’s, in the long term, for people who are taking a longer term view on the protocol, I think it’s hopefully going to be a really fair, clean way of launching for them.

0xn00b 1:06:27
Thanks. Thanks. Thanks a lot. That explains everything that they wanted.

RyanLion 1:06:32
Cool, appreciate the question. Good question. CJ, next up.

CJ 1:06:38
Hey, guys, thanks so much for what you’re doing. It’s awesome. This is super helpful, I know, for everyone that’s interested in participating with Prism. My question kind of builds off Mahesh’s question, and it’s just the concern about the risk of not being able to be made whole again. And I’m just wondering, over time, and arbitrage opportunities he’s speaking about, and that kind of stuff. I mean, are we going to potentially end up in a situation where there are massive price variations between yLUNA and pLUNA, and if I sell all my pLUNA for yLUNA, and I’ve got that double yield, but then the price of pLUNA shoots up and I can’t get back to where I was, I can’t get my LUNA back. What what does that kind of look like down the road do you think?

MrRefractor 1:07:23
Yeah, great question. So one of the interesting things about this is lots of people have lots of very different views about where they think yLUNA and pLUNA should trade given the feedback that we’ve seen and discussions we’ve had. And so I think the best thing for people is to work out whether you fall in the camp of do you have a strong view about where yLUNA and pLUNA should trade? If so, look at the prices and take your positions to kind of suit your view. Or what I’d advise for people that don’t have a strong view on that initially is refract your pLUNA and yLUNA and then you can deposit your yLUNA into the farm, if you want you can use your pLUNA in a liquidity pool. But I’d advocate, initially, refract them and then hold on to them, and wait for the kind of market to settle down a bit. So yeah, either have a strong view on where they should trade and use that, or kind of wait to see where the market settles on it after Phase Three goes live and then take your views after that. Because it could be volatile at the start. So I think people just need to be cautious about immediately selling all their pLUNA for yLUNA or vice versa. But ultimately as long as you have one yLUNA and one pLUNA, you’re always going to be able to get one cLUNA back and always be able to kind of reclaim LUNA from the vault. And you’re always also going to be able to swap pLUNA to LUNA, and yLUNA to LUNA, and cLUNA to LUNA on the AMM. Hopefully that kind of, I guess, gives my kind of thoughts on it.

RyanLion 1:09:14
If I can add, I’ve been thinking about this as well. I think you’re gonna have people using Prism who have got different risk profiles, right. So you’re going to have… Low risk people may just look at Prism as a essentially like a liquid staking tool, right. So if you reflect 100 LUNA into LUNA, exactly what MrRefractor just said there, stake your yLUNA get your staking rewards, sit on your pLUNA, and then you know for a fact that at any point you’re going to be able to go back to that 100 LUNA, you’re made full, plus anything that you’ve made from your staking rewards. And then you’re gonna have a whole range of profiles that go from people who, maybe, swap little bit over, people who provide liquidity, degens who are gonna go all in yLUNA, or all in pLUNA. You’re gonna have a whole range of profiles. But as MrRefractor said, if you’re concerned about being made whole again, just keep hold of both parts of your LUNA, don’t do anything silly with them. And you certainly won’t lose anything. Does that answer your question, CJ?

CJ 1:10:27
Yeah, that’s awesome. Thanks. I guess the other option you’ve got is maybe just to sit on the sidelines and then wait and see what happens with it, as well. Because you’re minting, as I understand it, it’s one for one at the start. But if you wait a little bit, I might be able to get more yLUNA than one to one if that kind of ratio changes over time. But yeah, it’s all, I guess, like you’re saying, it’s all about that risk profile. So thanks so much has been super helpful.

RyanLion 1:10:56
Cool. Good to hear from you.

MrRefractor 1:10:56
And what I’d say is, we want to… I think, as we discussed before, regardless of your risk profile, we want people to be able to feel if they choose to that they can participate in the yLUNA farming event. And so if you don’t want to trade all your yLUNA for… Sorry, all your pLUNA for yLUNA to sort of max out in the farming event, you can still participate in the farming event by just refracting your LUNA into pLUNA and yLUNA and just depositing the yLUNA into the farming event. So whatever your risk profile, you’ll still be able to participate in the yLUNA event, knowing that you can still make your LUNA whole again afterwards, if you want.

lejimmy 1:10:57
And I think I’ll just add here that we’re diving into the imagination realm here, and I just wanted to kind of do a little plug for Orbital Command and the audience there. We’re going to be working with him on essentially categorizing all the different strategies and things that you can do with the various components, and kind of just putting personas around, if you’re extremely risk intolerant, and you just want to be safe with your LUNA bag, versus you’re a total degenerate, and you’re gonna sell a portion of your pLUNA to go cross-chain on to Metis and start farming all of the interesting pools that they have going on over there. So, yeah, just kind of allude to that and let everyone know to be on the lookout for that in the future.

RyanLion 1:12:39
Nice tee up for Orbital Command, Jimmy, because next question is from Dr. Doscoin who’s, I believe, on the Orbital Command team.

Dr. Doscoin 1:12:50
Oh, well thank you. Indeed. Awesome chat, guys. I’ve been kind of in and out, so I’ve missed bits and pieces. But the bits I’ve heard have been really exciting. I think my question is probably a really basic one. Just want to confirm, with the cLUNA there, is that a direct one for one with LUNA? Or is there arbitrage opportunities available between the two?

MrRefractor 1:13:16
Yeah, great question. The best way to think about the relationship between cLUNA and LUNA is exactly the same as bLUNA and LUNA. So there should be arbitrage opportunities. Obviously, the arbitrage opportunities aren’t what they were on bLUNA to LUNA. But this is going to be a new LUNA derivative and so you are likely to get arbitrage opportunities that people take advantage of between the price of cLUNA and LUNA.

Dr. Doscoin 1:13:47
Cool, super simple question, super simple answer, I appreciate that.

lejimmy 1:13:51
Speaking of arbitrage opportunities, I know that we’ve seen the bLUNA-LUNA spread essentially be one to one now with Astroport having stableswap pools and now that they’re increasing the amplification coefficient such that it’s even more efficient. So maybe we can talk a little bit about if there are going to be any stableswaps on Prism Swap? And if so, if not, what would it mean for users of the platform?

MrRefractor 1:14:30
So at the moment, all our pools are going to be… So I guess, not 100% correlated assets. So they’re going to be cLUNA versus PRISM, LUNA versus PRISM, etcetera. One of the pools that we have that would be potentially eligible for stableswap or a stableswap with a tweak, is the xPRISM-PRISM pool and for those that aren’t familiar, on Curve protocol on Ethereum, those pools where they’re highly correlated, but one token is a compounding token versus another token, like stETH-ETH, make for great pools for a stableswap. So we don’t have initial plans for it, but with all these LUNA derivatives, I think there’s definitely going to be interesting iterations later on. And they’re may be good candidates to either trade on Prism Swap, or it may make sense to… We imagine that pools will spring up on Astroport, on Loop, and on TerraSwap as well. And it may be that these pools are great contenders for stableswap on Astroport, for example.

lejimmy 1:15:48
Okay, cool. So a.k.a., maybe short term, there might be some arbitrage opportunities between PRISM-xPRISM.

MrRefractor 1:15:56
That’s what I think there. And then, there’s going to be a lot of arbitrage opportunities between the price of LUNA, the price of pLUNA, and the price of yLUNA, I think. And so I think that’s definitely something that the feedback we’ve been getting is people are quite excited about that where they can take $100, buy $100 worth of LUNA, split that into pLUNA and yLUNA and then sell each of those for a total of more than $100. And I think there’ll be quite a lot of opportunities like that at the start that people are able to take advantage of. And it’s a nicer, simpler arb for people.

RyanLion 1:16:41
Cool. Yeah, I think particularly early doors, I think we’ve seen with lots of things that have launched on Terra, early doors, there’s some great arbitrage opportunities, and then people figure it out, people write bots around it, and then things tighten up over time. But we had a good run on bLUNA, at least. Eager Crypto, you’ve been waiting patiently for an eager chat. Please come in and ask your question.

Eager Crypto 1:17:04
Thank you. When Anchor launched on Terra, it brought in a huge amount of TVL. And, and Prism is going to be another source of stable yield. So I’m excited to see what type of TVL it can pull in. Speaking of Anchor, I’m just kind of curious, and maybe this is just too big of a question. But what effect might Prism have on Anchor if it pulls in a lot of LUNA or bLUNA from Anchor? Is that something you thought about? And then the second question, I guess, is what will be the biggest effects on the yield of LUNA? Are they’re going to be governance proposals, like the percentage of LUNA that’s staked, the price of LUNA, what kind of things do you think will affect that yield? Thanks.

MrRefractor 1:17:50
Yeah. No worries at all. Just to clarify, I mean, on the second part of your question, are you referring to what do I think that are key drivers of yield in LUNA or changes in the underlying LUNA’s yield might possibly be?

Eager Crypto 1:18:06
Right, yeah exactly. Right now… Well, it was 3%. And then they burned the community pool, it went up to like 10%, 12%, now it’s back down to like 7% based on a number of factors. What things do you think will most affect that in this year?

MrRefractor 1:18:23
Yeah. Great question. So on the first part of your question, I think that I see plenty of room in the ecosystem for LUNA to be put in Prism without affecting other protocols. I think we’ve already seen Astroport launch with a huge amount of bLUNA-LUNA going into Astroport and getting locked up for a long time. I think we’ve seen Stader have a great launch, and they’ve got some 5.5, 6 million LUNA or something, so whatever that is, 600 or 500, 600 odd million TVL, and that doesn’t appear to have had a detrimental effect on Anchor. So I feel like there’s enough different things to coexist and ultimately, extra utility for LUNA is going to drive up LUNA’s price and part of LUNA’s yield is paid in LUNA itself. And so that’s going to drive up that part of the yield as well, which is what is used to subsidize deposits in Anchor. And then on the second part of your question, so what’s really interesting with LUNA, I guess, I probably been around since the end of 2020 in the Terra… Or started following it at the end of 2020. So it’s like a brief history lesson in terms of what’s actually making up the yield that you’re receiving on LUNA at the moment.

MrRefractor 1:20:03
So previously, for people that are familiar with the burn mechanism, the on-chain burn mechanism, when UST is minted, obviously, LUNA is burned. And before, that LUNA, when it was actually burned, it actually wasn’t burned. Some of it used to go to the community pool, and some of it actually used to be paid out to stakers. And so that’s why people were receiving a portion of their yield in LUNA. And then the community pool at the same time, also build up a huge amount. And that’s what we had that burning event recently. And so, LUNA’s yield, because you had that burning event, not only did you have the community pool get burned, but what happened is when LUNA is burned for UST on-chain, a swap fee is paid. And a swap fee is like you pay on TerraSwap when you trade, you might pay 0.3%. What happens with LUNA is there’s a big on-chain swap fee that happens. And the larger the volume you try to swap in one go, that fee kind of ratchets up. And so I think when it was getting swaped, the LUNA was paying 30% in swap fees. So you ended up accruing this huge amount of UST, something like 1.5 billion UST, and it’s now that sat in the oracle rewards contract, which is a fancy way of saying it’s been put in a smart contract, which is going to be paid out to LUNA stakers over two years.

MrRefractor 1:20:40
So one interesting thing that happened is, initially, going back to the beginning of 2021, when the LUNA was getting burned, and 45% of it was getting paid to LUNA stakers, it was generating a ton of LUNA, and people’s yields were extremely high. And so a proposal was made to move that LUNA from being paid out over one year to being paid out over three years. And then after the community pool burn, what we saw was a proposal to move from three years to two years. So that’s a long winded way of saying interesting dynamics are, what if there was another proposal to change that two years to one year, or to move it back from two years to four years or something like that? That drastically changes the profile of when you’re receiving your yield. And we’re also in LUNA, where the proposal is to set the tax fee at zero, which is another source of revenue for LUNA stakers. So really, LUNA yield now is based up of all this community swap fees that have built up in this contract that’s being paid out over two years. There’s unlikely to be another really large burning event like that, so that pool may get depleted. And then also you have now your sort of swap fees and what make up you’re kind of the thing that keeps adding in small amounts to that pool.

MrRefractor 1:23:13
And so it’s definitely going to be interesting to see. But I think the timing of that oracle rewards contract, how much swap fees are generated, the amount of on-chain swaps, basically, so it’s the volume of swaps and the size of swaps. So I think that’s going to be interesting and then, before, airdrops we’re making up 2%, 3%, 4%, 5%, so nearly half of LUNA’s yield. And obviously, we’ve seen that fall off a cliff, we’ve seen Mirror’s airdrops stop, MINE’s airdrops be reallocated, I think Anchor’s looking at other initiatives that they can potentially use their airdrops for. So those are going to be the really interesting things for the… And drive people’s views on yLUNA? Sorry, I realized I’ve gone off on a bit of a monologue there.

Eager Crypto 1:24:07
No, that’s very interesting. I really appreciate the perspective. What is your opinion on the tax rate? Are you for or against that?

MrRefractor 1:24:16
I think when you sort of looked at what the tax fees were that were actually getting paid out to stakers, because it’s my understanding that those don’t get rolled up and paid out over two years. They get paid out on a block by block basis from my understanding, and they’re negligible I think. So from a LUNA staker perspective, I don’t think it’s gonna be… It’s a very small rounding error on your total LUNA yield, to the extent it cleans it up from a smart contract builder’s point of view because of these extra considerations they had to do when they’re writing contracts to account for tax. I think it makes a lot of sense.

Eager Crypto 1:25:05
Nice. Okay. Yeah. Hopefully they leave it in there in case we need it again in the future. Because once that burn runs out in two years, you might need extra source to support that yield of LUNA. But we’ll see. Alright, cool. Thanks.

MrRefractor 1:25:19
No worries.

RyanLion 1:25:21
Thanks for the question. Eager. Frugal, I saw you dropped out after waiting very patiently. But you’re back. So please come with your question.

Frugal Lunatic 1:25:30
Yeah, that’s how Android works. But yeah, so I had a question that you mentioned that Pylon is a place where we can also get PRISM tokens by, I think, staking yLUNA? Are there any other protocols where we would be able to do that?

MrRefractor 1:25:47
Yeah, so just to clarify on that. Potentially, in the future, so the initial conversations we’ve had with Pylon are that they would enable yLUNA farming. Four other protocols launching on Pylon is potentially a new way to launch on Pylon gateway. Obviously, that would be subject to any governance approval by Pylon’s new governance capabilities. And in terms of other protocols, they would very, very easily be able to take yLUNA and use that to launch their token. So I think you’ve seen something similar for people that saw Angel launched via Apollo’s community sort of farm shop, I think it was called, or farmers market. So they did that. You’ve seen that. Orion did their private farming event using aUST, so Anchor yield. You saw Apollo obviously did their own one. So I think lots of protocols will. The good thing about the yLUNA contract, is it’s very simple for people to integrate and use for their own purposes, if they want to do a yield redirection, so I think Pylon will be able to do it. I imagine lots of other protocols may want to just do it natively themselves. So I think it’s hopefully a good building block that people can build on top of, not just for yield redirection, but lots of different features.

Frugal Lunatic 1:27:26
Okay, and I had a follow up questions about limit orders. So you mentioned there would be limit orders for LUNA, would that be just for LUNA, or would that be for cLUNA, pLUNA and yLUNA?

MrRefractor 1:27:39
All of them. And one of the fun features about it is, if you’re on a centralized exchange, like Binance, you can only swap between the two assets in that particular market. So say, it’s BTC-USDT, or something like that, you can only leave an order in BTC to buy USDT or vice versa. Whereas on our… Because of the way that AMM’s work and because of our limit order architecture, you’re going to be able to leave an order in any asset to buy any other asset on the Prism DEX. So you can leave an order with aUST to buy pLUNA, yLUNA, PRISM, xPRISM, whatever you want, and vice versa. So all orders and all combinations are going to be enabled for you in Phase Three.

RyanLion 1:28:37
Okay, Frugal, I hope that answers your questions. Just on the first question, just for complete clarity. So the PRISM-yLUNA farming event will take place directly on the Prism webapp, not on Pylon, just to clarify that point. But thanks for your question. Great questions, and pretty excited to be able to, as you say, MrRefractor to be able to maybe put in a limit order for, let’s say I was hoping to pick up cLUNA at a 5% discount, for example, in the event of some kind of market crash where everyone’s trying to get out of PRISM to pay off loans or whatever they’re doing. There might be some some really great opportunities there that hopefully will get picked up on. So that’s really interesting.

lejimmy 1:29:25
Sorry Ryan, if I could add.

RyanLion 1:29:26
Yeah, of course.

lejimmy 1:29:27
I think the picture that MrRefractor kind of painted earlier around the history of the staking rewards makes it seem like the yLUNA APR staking rewards would be much more dynamic than people think. I think on a day to day we don’t see it move much, but it has changed quite a bit. So combining these limit orders with these major changes in the way that LUNA staking, airdrops, and of course, as the utility of UST just continues to go cross-chain to all these other different layer ones, layer twos, we could see more of the accelerated supply shock of LUNA, right. So we’re wrapping all these assumptions and breaking them down into their individual components and allowing people to not only speculate now, but essentially leave their beliefs on-chain, right, in the form of, “Hey, I believe pLUNA is worth this much, yLUNA is worth this much.” I can deposit aUST and essentially not have any lost opportunity, any opportunity cost to make this kind of bet. I think this just opens up so many new different, I guess, theories around LUNA and how we can execute and trade and speculate on them.

RyanLion 1:30:56
I’m looking forward to some more imagining on that Jimmy, as pLUNA and yLUNA start to find their price in the market. reigning.eth, thanks for your patience. You’re next up with your question, ser.

reigning.eth 1:31:11
Hi, thank you. I have a question. I recently listened to the Delphi Digital podcast, excuse me, with Hyperion. And it got me thinking because he told kind of the backstory of where the idea for Prism came from, with the history in TradFi of bonds strips, and how you would take a bond that has, let’s say it’s trading at par value of 1,000. And it’s paying out a yield every month or so. And you would sort of strip off those bond payments and sell them off as one asset and then sell off the principal portion, which once the bond reaches maturity, you could turn that in for the underlying $1,000 payment at the end of the bond. And I was thinking about that in the context of a perpetual asset, like pLUNA, and I’m having difficulty understanding, I guess, where the underlying value of a principal portion of a perpetual would lie other than the governance that goes along with it. Because, if you had a one year bond essentially over $900 of that $1,000 would be going to the principal portion, and a very small portion of it would be going to pay for the 12 monthly yield payments. Conversely, if you had a 30 year bond, which was paying out every month for 30 years, an increasing proportion of that $1,000. the value would lie in those yield payments, rather than having to wait 30 years, to turn in the principal portion of that and get your $1,000. So thinking about all of that, in the case where you have a perpetual product, where essential you never turn it in to get the underlying value of it, right. I’m having difficulty understanding what is p… Oh, excuse me. What is pLUNA? Essentially, why should I want pLUNA, other than the governance that goes along with it?

MrRefractor 1:33:42
Yeah, exactly. So the first point you made is exactly where do you value governance, because that’s effectively what we’ll… It’s not happening in v1, but we’re going to enable governance voting with pLUNA. And I think that’s a really interesting question about where does governance, if you can isolate it, get valued, as we were talking about some of the Curve Wars and the bribing that’s going on in Ethereum at the moment is providing an indication of governance. And I think you also have the question of what’s the utility of pLUNA? Can it generate yield? Can it have useful utility? And I think as we see money market protocols evolve, where the asset can be lent out, I think it starts generating yield and then you can start doing your cashflow based analysis of how you value it from there. And I think honestly, I think it’s a super interesting question, because I obviously come from a fixed income background myself, and in a fixed income background you value everything based on cashflows. And an irredeemable asset that has zero cashflows associated with it, has a terminal value of zero, but then you have things in… Then I start wondering, well, why does Doge trade where it does or why does Shiba Inu trade where it does? And so what’s going to be interesting with this is you have the inflation hedge element of an asset that doesn’t bear yield. So that’s something that you see with Bitcoin, for example, that doesn’t have a yield. You also have the governance aspect of this, you have a utility aspect, potentially, if pLUNA is more… Utility gets built out for it. And I don’t want to… We have some announcements about potential utility for pLUNA that will come out in due course, once the relevant people or the relevant protocols or applications have kind of applied that utility for them.

MrRefractor 1:36:07
And so it’s kind of working out like, what does your ownership right to the underlying asset give you, and fundamentally, it’s also one half of the key to unlock LUNA from the vault, and there’s a price set. What price would you sell that to someone for? So there’s all these kind of different forces. But I agree with you, like from a fund… If things in crypto were just valued on a fundamental cashflow basis, then you would look at it very differently. But it just… I guess my view is, crypto just doesn’t get valued just on a cashflow basis at the moment. And then you also have these other utilities as well. I mean, it’s a super interesting question. So I’m always happy as well to jump into Discord or jump on Telegram to discuss because I find this topic fascinating as well.

reigning.eth 1:37:06
Yeah, I thought your answer was interesting about potential other use cases for it. But I mean, if that’s the case, then I would almost think that because there is a component of it, which does have the yield, which… I mean, given that crypto and especially with the question a couple of speakers ago had about the changing nature of the yield, you’re never going to be able to get, put your finger on what the NPV of all future staking rewards are. So it’s a super difficult problem to think about from the perspective of, I guess, a traditional financial asset like that. But almost like if you could refracted into two separate components that have added utility, it almost seems like… Because they have more utility, they’re almost worth more, but then at the end of the day, they can’t be worth more than what the underlying token is. But it almost… At the end of the day then, when you think about it like that, the underlying token then has added utility, because you can refract into these two separate components that have added utility than before it had the ability to be refracted. If that makes any sense?

MrRefractor 1:38:17
Yeah. Yeah, totally. I mean, it’s going to be really interesting to see where the market prices it. But I agree with you. If you just think from a LUNA perspective like, “Okay, well, how do I value LUNA just using LUNA cashflow?” If that’s the way that assets… If you’re taking the view that that’s the way assets should be valued, it’s a non-trivial task to value LUNA because, yes, it’s a perpetual instrument with a cashflow associated with it. But for the reasons we discussed before, you don’t know what that cashflow is going to be in a year or two years time because this oracle rewards contract is getting depleted. You don’t know whether there’s… What the kind of discount rate that you should be using is. So I think it’s a… You mentioned the Delphi podcast, one of the things we discussed on that is obviously, $1 now is worth much more than $1 received in a year’s time, which is worth much more than $1, received in 10 years time. And DeFi hasn’t really had to ask itself the question of what is the appropriate discount rate to use to tell you what is the fair value of someone telling me that they’re going to give me $1 in a year’s time. And so you have all of these kinds of variables. And so, one of the key variables is going to be what is the discount rate that people use for future cashflows. So, yeah, it’s going to be… Because there’s so many dynamics in play, and so many different components, people obviously naturally seem to be having lots of different views about where it should trade, which ultimately is gonna make a great market for people to use and generate lots of fees for liquidity providers, I think, as people speculate and put their views that they want to represent.

reigning.eth 1:40:18
Yeah, and given kind of the statement that you made about the value of governance and in the context of the Curve Wars, I mean, I can imagine a situation where you have quite a bit of LUNA that’s refracted. And there’s quite a bit of potential governance that could be bought up for much less than what it costs to buy LUNA. So, yeah, it’s just some interesting implications on what that would mean for governance of the entire protocol.

MrRefractor 1:40:45
Yeah, exactly. I mean, it’s all down… It obviously would take a material amount of LUNA in the vault to skew governance, given there’s 330 odd million in LUNA governance at the moment. But that kind of stuff is really interesting, because on Curve, Convex can control liquidity incentives and how they’re allocated. Governance of a layer one is so much more than liquidity incentives. It’s not just liquidity incentives, it’s all the kind of community spending it’s controlling, whether the oracle rewards contract is paid out over two years versus three years or something like that. But as I say, to have material governance vote would require surplus, six figures, million of LUNA into… Or, sorry, 100 million or more LUNA into Prism. But I think fundamentally being able to kind of represent your governance votes via pLUNA, if there’s important governance proposals going through, and there have been more and more recently going through, I think, is going to be pretty powerful and it’s going to be interesting to see how people isolate that.

RyanLion 1:42:01
You can dare to dream, MrRefractor, 100 million Prism TVL.

MrRefractor 1:42:09
Can someone… Yeah, someone put that in Jimmy’s dashboard and see what number it spits out?

lejimmy 1:42:15
That’s a lot. That’s a lot.

RyanLion 1:42:18
That’s a really great question. Some great thoughts there, reigning, so thank you for that. If I can just add one thing here. I think v1 of Prism is the perpetual contracts. And I think you’ve got planned further down the line to have non-perpetual options with different maturities. Is that something that you guys are working on, and how long until we can maybe expect that?

MrRefractor 1:42:43
Yeah, exactly. So that is something that we’re working on. So on a personal level, going back to that $1 in the future being worth less than $1 in your hand now. I think we’re really excited to do that for aUST. So for aUST, imagine if you could sell a year’s worth of your aUST yield, yes, it might be approximately… You might receive 20%. So if you had $100, you might receive $20 over a year. But if you then sell the right to that $20 what’s someone gonna pay you for the right to receive an expected $20 over a year? Maybe they pay you $15, maybe they pay you $10. But once you have that base layer of what people are prepared to pay you for a 3 months aUST yield, 6 months aUST yield, 9 months, 12 months, etcetera, that’s going to be a core building block for the rest of DeFi. It’s also… You’ve seen protocols like Alchemix, where you can deposit DAI, and they’ll give you a loan on your DAI, maybe they’ll lend you 50% of the DAI that you deposit, and they’re going to put your DAI to work in a yield generating protocol like Yearn on Ethereum. Well actually, if you start looking at what Prism can do with aUST, you might decide that you want to raise 50%… Say, you have 1,000 UST, you might decide that you want to raise 500 UST against your 1,000 UST so you might end up saying, “Well, look, I’ll mint a yaUST and a paUST, and I’ll sell that yaUST for $500.” Say the price of selling two years worth of… Or three years worth, for example, of Anchor yield. Say, someone will pay you 50 cents on the dollar for that, then you’ve kind of been able to get a liquidation-free loan against your future yield and you know that in three years time, you’re going to take your paUST token and swap it back for your original $1,000.

MrRefractor 1:44:58
So it’s going to allow some Really interesting applications. And we’re going to start doing it for aUST and then also for things like potentially LP tokens on Astroport. If there’s some LP farm that’s yielding 500% or 400%, you might decide that you want to sell a three month yield token, or a six month yield token to kind of lock in that really high APR, and convert it into UST so that you’re not exposed to the volatility. So yeah, perps are the first thing, and then fixed maturities are the next step.

RyanLion 1:45:37
Cool. Thank you. Again, thanks for the question, reigning. Some good imagining going on there. Orbital Command, I’m not sure who’s behind the curtain today. But thanks for waiting patiently. And please come in with your question.

Zion 1:45:51
Yeah, absolutely. Yeah. This is Zion from Orbital Command. Yeah, our team’s grown a bit bigger now, so it could be anyone behind the curtain. But yeah, so I have a question about xPrism, actually, and LP-ing it specifically. And I don’t know if this got addressed earlier when I was not on the Space. But I was curious if you could, Hyperion, just expound a bit on LP-ing xPRISM, and what types of fees or yield you’re occurring there? Because I believe, when I was looking on the light paper, it was saying that LP-ing xPRISM would give you LUNA’s yield, as well as some of the other regular swap fees and incentives and stuff like that. So I was just curious if you could expound on what LP-ing xPRISM actually entails?

MrRefractor 1:46:40
Yeah, of course. So in the light paper, I guess… That part is referring to the four different sources of what makes xPRISM’s yield. So that’s 10% of yLUNA yield, that’s of yLUNA that’s staked, 100% of yLUNA yield for yLUNA and cLUNA that aren’t staked, 0.1% of all AMM swaps, and 0.3% of any successful limit order fees. And so all of those rewards and fees are all converted to PRISM, say, once per day, or twice per day, or whatever it ends up being, and are then dropped into the xPRISM pool. So xPRISM is like aUST, so more and more UST gets dropped into the aUST pool, which increases the value of aUST versus UST. So you’ll have seen… When Anchor launched, you could swap one UST for one aUST. Now, you can swap one UST for 1.17 aUST, or vice versa. But that’s kind of the way that you’re gonna see it with xPRISM. Because your xPRISM just basically represents a claim on the pool of PRISM tokens that keeps getting bigger and bigger, you can just use your xPRISM in a liquidity pool, and know that the value of your claim is just increasing all the time. And this is the same with LunaX, for example, in the LUNA-LunaX pool, that Stader are incentivizing at the moment. So your LunaX is just constantly increasing in value as more and more LUNA gets paid into the LunaX pool. And so you could, for example… Because xPRISM just represents a claim on a pool of PRISM tokens, you could send your xPRISM over to Solana, you could send your xPRISM over to Ethereum, you could use it in Mars Protocol and lend it out as collateral, you could use it to provide liquidity on the Prism AMM or any other AMM. And all the while, the value of the pool is increasing, and as a result, the value of your xPRISM is increasing and you never have to claim rewards because it’s just an autocompounding token like that. Hopefully that gives a bit of an explanation.

Zion 1:49:28
Yeah, no, that’s fantastic. So then that would also mean that it’s giving you kind of a tax advantage as well, because you don’t have to go in there and claim your rewards every time and create kind of a taxable event because it’s a compounding token, am I correct in saying that?

MrRefractor 1:49:44
Um, yeah, but I’m gonna give all the usual caveats about not tax advice, NFA, DYOR, etcetera, etcetera. But look, I guess a way I think about it is, say, Anchor yield is 20% on UST, I’m receiving 20%. If I was having to claim UST and that was getting paid to me as income, then theoretically I would have to pay income tax on that. And say, for argument’s sake, income tax is at 50%. So if I was receiving 20% yield on Anchor, and I was having to collect all that UST, I would only net receive 10%, because I’m paying 50% on the 20% yield. Whereas if you have a compounding token, then technically, in some jurisdictions, because that’s just compounding in pricing, you’re not receiving a regular income from it, even though it’s a similar thing, when you sell the asset you realize a capital gain are a chargeable gain, rather than a income tax event. And in many jurisdictions for aUST for me based in the UK, I’d be paying 20% tax rather than 50% tax. So actually, my net yield on Anchor if it was income would be 10%, but my net yield on Anchor, because it’s a compounding token, is actually 16%. So when people start looking at these headline yields, a lot of the times they should start thinking about, “Okay, what’s my net yield after tax?” And that can make, in certain jurisdictions, a compounding token significantly more attractive than an income-paying token.

Zion 1:51:38
That is super cool. Yeah. Thanks for Thanks for clarifying that. Yeah, and thanks for answering my questions as well, I appreciate it.

MrRefractor 1:51:45
No worries at all, ser.

RyanLion 1:51:46
Thanks to the questions, Zion. Looks like we may be on our final question here. So Phildo, please make it a good one.

Phildo UST. Baggins 1:51:55
Oh, yes. All right. What’s up, guys, thank you very much for doing this. My brain is refracting, I’m trying to remember my question. Oh, yeah, about limit orders. So you mentioned the bots and the incentive structure stuff with the priority for the limit orders, and how that should strengthen the whole system? Can you go into depth on that right now, or later? Is it prioritized to the individual, let’s say, myself and someone else placed an order at the same price, is there a way for me to prioritize my order over theirs some way? Or I’m just trying to understand all of that.

MrRefractor 1:52:37
Yeah, no, good question. So basically, you’re both going to be paying a fee. So if I’m a bot executer, or I’m running bots on this, then, to the extent I see two orders at exactly the same price, unless one of them’s accruing a significantly larger fee, and I’m able to discern that as a bot executer, and by larger fee, I just mean a larger size trade, then I’m going to end up executing that. But the actual reality of it is larger size trades result in slippage, or larger slippage. So actually, the bot is just going to constantly weigh out which orders can get executed. And so smaller trades, even though they might generate less fees for the bot, might get executed at a similar time as other trades, because they’re going to result in less slippage. So actually, the limit order level would actually be able to be achieved. But the reason for doing it like this is because we’re incentivizing bots, multiple different people, anywhere in the world can run a bot. And it decentralizes the execution of these orders rather than just relying on one single bot. And so these bots will all be competing over it. And the theory is, if there’s money to be made for a bot executer for doing these, they’re going to compete quite aggressively to execute your orders. And you’re going to result in much better, much quicker, faster execution when your limit order level is achieved. That’s kind of how it works in a high level. But I mean, I can get… If we hop in the Discord, or Telegram, I can get pretty granular.

Phildo UST. Baggins 1:54:33
Sorry, I didn’t mean to interrupt you. That makes sense to me. My question, I guess, implies to the individual. That all sounds awesome, by the way, but for the individual placing a limit order, can I pay more to prioritize my limit orders? Let’s say I’m not a whale, or say I am a whale, let’s say that doesn’t matter, but we’re placing an order at the same price and I want to prioritize mine because it’s important to me. Is there a way for me as an individual to do that regardless of what these bots are doing, I guess is what I’m also asking.

MrRefractor 1:55:04
We did so. So at this stage, we’re not going to have that. I mean, to the extent… It would be pretty easy to build in something that allowed for that later on, if holders decided that it was right. But in the end, like you’re kind of saying, we want people to… The starting process for most of the things we’re trying to do is to try to level the playing field for everyone, whether you’ve got $100 you want to leave an order on, or whether you’ve got $1 million you want to leave in order on. And so we don’t want to allow people to kind of pay more initially to get to… So we just basically want everyone to kind of have similar chances and to make it fair.

Phildo UST. Baggins 1:55:53
If I can make a suggestion really quickly on that. That’s why I think a percent of incentive structure for the individual might make sense. Let’s say, I’m an whale and I really want to prioritize my order, because it’s important to me, I have to pay a percentage instead of a flat fee or something like that. But yeah, that all is making sense to me.

MrRefractor 1:56:14
I mean, those kinds of suggestions, I like. At the moment, we’re going for the sort of user friendly version that we want people to get in there, test it out, try leaving a limit order. For a lot of people, there’s a lot of people that are really familiar with leaving… A lot of more sophisticated people that are a lot familiar with leaving a limit order, rather than just market buying on KuCoin or whatever.

Phildo UST. Baggins 1:56:43
As someone who’s a degen, I would pay to have my limit order prioritized as an individual user on the user end. So that’s, I guess, all I’m suggesting. There’s some versions on Terra that are doing stuff like an ticket system, I think.

lejimmy 1:56:57
To be deliberated quite a bit. Should it be a flat fee? Or should we take a percentage? And if there’s a percentage, exactly what percentage should that be? Yeah, I think what Phil was mentioning is like, “Hey, let’s just let whoever places the limit order, let them set the fee.” That’d be pretty interesting. And then we can think about that a little bit more offline.

Phildo UST. Baggins 1:57:19
100%. Thank you.

RyanLion 1:57:24
Cool. Another great question. Yeah as we can see from the reactions, there’s quite a lot of interest around the limit order capability. So I think that’s going to be a really popular feature. I did say that Phil was the last question. However, Drick was up here as a speaker before, but I’m pretty sure he must be an Android user, because he dropped out. So… Oh, he’s dropped out again. I will let him, if he doesn’t drop out, have the last question. And he’s just connecting in as we speak. Drick, do you want to come in with your question?

Drick 1:57:58
Thanks. Sorry, Android problems again. Fascinating conversation around kind of yLUNA and pLUNA. I had a question and I know that non-perpetual yLUNA is only going to come up in the future. But I wanted to understand the kind of thinking around it. Would pLUNA be fungible, in the sense that it would be… If I think of it as a key to unlock yLUNA, would pLUNA be able to unlock perpetual yLUNAs as well as the upcoming, say, three year, or two year, or one year yLUNA tokens that may be coming up in the future?

MrRefractor 1:58:37
Great question. So, no, wouldn’t be able to be fungible. Because if you think for example, if you split… And I just use Anchor as an example, just ’cause it’s nice round numbers. If you split a one year aUST token into yaUST and paUST, then say, like we were saying before, so you have $100, you’re expected to receive $20 over a year, so you split your $100 into a yaUST and a paUST token. And someone says, “Well look, for that expected $20 I’m happy to pay you $15.” Then that means that you have a $15 yaUST token, and that must mean that because you had $100 that your paUST is worth $85, so $100 minus $15. Now what happens is, over the course of that year, Anchor pays out its yield to the yield token holder. And at the end of the year, you can take your p token and redeem it for $100. So over the course of that year, your p token goes from the value of $85, to $100. So you’ve actually got a fixed guaranteed yield on your p token. Now, if you imagine a six month yield token, a six month Anchor token, where you split it into… You did six months p token in a six month y token, then obviously those numbers would be smaller. So your p tokens wouldn’t be able to be fungible because they’re effectively fixed coupon. Sorry, fixed yield zero coupon bonds, where they just go from, on a one year token, $85 to $100. On a six month token, it might be $55 to… Or, sorry, $45-$50, or $95-$100, or whatever you end up having, so that’s kind of a long winded to say it’s your right to receive back your principal at the maturity, and those, by definition, can’t end up being fungible. And so it’ll be a different one for each one. So for every maturity, you’ll have a corresponding p token and y token that won’t be fungible with each other.

Drick 2:01:11
Great. Thanks. Such a fascinating topic. Appreciate the thoughts, ser.

MrRefractor 2:01:14
No worries at all.

RyanLion 2:01:14
Thanks for the question. And I think that wraps us up. So a big thank you to Hyperion, MrRefractor, and Jimmy, for joining the spaces today. I think it’s been really interesting to talk through the Prism tokenomics, to talk through the launch mechanisms. And then obviously, we all got to do a bit of imagining at the end of the session as well. in terms of keeping up with things that are going on with Prism, so I’d highly recommend if you go to the Prism Twitter page, there’s a link to a Notion page in the Prism header description, that actually is a great resource for anyone who’s trying to get their head further around Prism. So there’s a link to all the videos and podcasts that Hyperion has done. There’s a link to a bunch of community threads on Twitter that are kind of explaining the differences between yLUNA and pLUNA and all that stuff. There’s links to the website, the white paper, and also to the Telegram and Discord. And I’d also personally recommend the Telegram and Discord for Prism so far, as we’re getting closer to launch I’m sure that they’ll descend into chaos. But so far, it’s been really, really great places for discussion. So if there’s anything that’s really caught your eye, during this call, I think if you want to pop into the Telegram or Discord and have a discussion, there’s lots of smart people there who are willing to have a conversation.

RyanLion 2:02:54
In terms of events coming up. So there’s an event tomorrow with… Well, in fact, Orbital Command, who are still in the call here, have put out a graphic. I’m sure it’ll be retreated from the main Prism account with all the events happening in the next week, where you’ll get more opportunities to come and learn and listen and ask questions. But there’s an event tomorrow with Orbital Command in their Discord. There’s an event on Thursday with Cephii, where I’m sure lots of imagining will be taking place. And then for any non-English speakers, or for any Spanish speakers, there’s an event with the Lunaticos on Sunday as well. So lots of opportunities to hear more and talk more about Prism coming up. That’s all we have for today. So thank you all for joining. I hope you found it useful. And also a shout out to Mr. TerraSpaces, who I see in here, who I’m sure will be putting out a recording in the not too distant future. So thank you for that, ser. Take care everyone, and we shall speak soon.

Finn 2:03:58
Thanks for checking out another episode of The Ether. That was the Prism Launch Q&A. Recorded on Tuesday, January 18th 2022. This episode of The Ether was brought to you by Orbital Command a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic Community. Find out more at TerraSpaces appreciates their support. For, I’m Finn. Thanks for listening.