Hello and welcome to The Ether. Today is Saturday, January 8th 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. Follow Orbital Command on Twitter using the link in the show notes to receive regular threads on Terra protocols and yield strategies, news, resources, and Twitter Space discussions. You can also support their community efforts by considering them next time you’re delegating or redelegating your LUNA. Today on The Ether we have the Prism Roundtable hosted by Orbital Command and some friends. Let’s take a listen.
Rebel Defi 1:21
It is now eight o’clock pm in the UK. We’ve got one of our guests here. I’ll just bring lejimmy up, and then hopefully danku will be… Yeah, hopefully danku will be joining us as well. So two guys that are often kind of asking questions, interviewing the project leads and stuff, we’re going to be turning the tables on them a little bit and hearing what they have to see.
Alright guys, welcome. Welcome, everyone. We’re still kind of populating in here. But my name is Sha and on behalf of Orbital Command, I want to welcome you to our roundtable discussion on Prism protocol. I’m co-hosting this with, as many of you know, Rebel Defi, otherwise known as Andy, he’s part of the team as well. And Joseph is another part of the Orbital Command team, goes by the handle of Eager Crypto. So we’ve got two special guests today with us, danku_r and Jimmy Le, who are both, I think you can say community Prism experts. But basically, this is everybody kind of getting together who’s super excited about Prism, to just kind of talk about collectively what we know about it so far. What are the details that have been at least leaked by Hyperion and maybe kind of crowdsourcing some good strategies about this opportunity that’s coming up at the end of this month. So Andy, do you want to add anything?
Rebel Defi 3:01
Sure. That was, yeah, brilliant introduction, Sha. Thank you very much. I was thinking we should just get into it. We’ve only got about 50 odd minutes for this space. Got LUNAomics with a Space on straight after us, Jimmy’s got personal business to attend in about an hour or so as well. So I think we should just go for it. To begin with I thought we could get danku up. I mean, potentially, we all know danku. But anyone who doesn’t know danku, get on YouTube search for him, subscribe, check his videos out. Basically the best YouTube content on the Terra ecosystem. I was wondering if I could ask you, danku, hi. Could you give… I mean, most people here probably know quite a lot about Prism already. But for those that have forgotten or have gone off into other protocols, would you be able to give us a brief overview of what Prism is, what problem it’s trying to solve, and what we might be able to do on Prism.
Hey, guys, hope you can hear me. Way too nice of an introduction. Thank you mister. Yeah, so what is Prism doing? Maybe some people know from Ethereum, Pandle, right? They are basically doing… Or have a similar idea. If you have tokens or coins like LUNA that all of us know that you can stake so they’re creating yield. The base idea of Prism is hey, let’s break this down, right. There is the principal part, the true price of LUNA, and on the other side over time, there’s a yield that LUNA is creating. And the idea of Prism is to break that up, and on a market just basically trade against it if people are interested in swap. And, I mean, there is no kind of understanding right now how great that could be, right, because if we start breaking down different tokens and coins into principle, and they yield part, it could get wild, right? If you think about stuff like aUST. aUST is basically having a yield part, right? You can then say usually this yield part is described as y and then the token name, so yaUST, and then you have the principal part of this aUST, which is basically the dollar as the price, and that’s how it could go on. Also in the last days, Hyperion, I think, said… Or SJ, that they’re working on LP breaking up, so the LP itself. I think a lot of people usually think LP is like two coins that you put into a pool. But in the end, the LP token is just a normal token, it has a price and basically it could be sold on the market, right? It has a yield, either rewards or swap fees, so you could also break down LP tokens into the yield part and the principal part. And that’s basically the idea of Prism. And then their amount, right, in terms of trading, that could be more about kind of futures trading and perpetual swaps. But I don’t know, Jimmy, if you have more insights there. But in a nutshell, that’s what Prism is.
Rebel Defi 5:41
Thanks for that reminder. I’m not sure if any of us…
There’s already so much interesting stuff, just in what you said with the LPs and stuff, and aUST, that I already want to dive into. Sorry, sorry to interrupt you, Andy. But Jimmy, did you have anything to add on top of that, or anyone else want to speak or want to add on to that right now?
Hey, no, I think that was brilliant. Yeah, I’m sure we can get into the nitty gritty. But I definitely want to continue building the scope and kind of setting the stage for what’s coming up here in the next couple weeks.
Rebel Defi 6:17
Awesome. I’m just wondering if we could sort of bear in mind throughout this discussion, sort of different personalities when it comes to Prism. And like, we’ve got Sha on the call, he is our hype man. He is degen to the extreme. But you’ve also got me here. I mean, I’m sitting on this Twitter Space, looking at my Anchor Borrow right now, just hovering under 50%, getting a little bit stressed out. So I’m sure there are going to be different strategies for different risk profiles. So if that’s something you can maybe consider as you’re sort of responding to the questions, that would be awesome. So yeah, we’re going to be able to… There was a question actually, I’m kind of interested in, someone asked me on Twitter, what is cLUNA? And I’m just wondering why does Prism need cLUNA and often we talk about p and yLUNA, but what’s the cLUNA about?
Yeah, good question. I think in a nutshell, if you just have LUNA as a token, it doesn’t create a yield, right. The only way to make LUNA a yield bearing token is for staking it, right. So what Prism is doing, it’s taking your LUNA and then it’s staking it in the background, and that’s what then creates a liquid token which is called cLUNA, which is basically similar to concepts that we know from bLUNA, or maybe also nLUNA, or now, LunaX, which are also liquid staking derivatives. And this makes then LUNA truly a yield-bearing token. And you never see this cLUNA, it’s basically just a technicality in the background, and then they break it up into the y part and the p part. I hope that makes sense.
Is it just a technicality in the background? Because I think one of the initial pools I thought Hyperion said was going to be cLUNA-PRISM so I think it’s there, right?
Let me… Jimmy, go ahead. I need to go… There seven pulls, is cLUNA one of them? I need to…
Yeah, I think… I mean, I tried to do a little bit of research for this Space. Generally just… And I’m not really a big brain but yeah, I think LUNA to Prism. So I think yeah, maybe someone correct me, bit this is a good thing to cover as we’re kind of doing the basics. I think the initial pools that Hyperion said that were going to be launched with Prism are cLUNA-PRISM, pLUNA-PRISM, yLUNA-PRISM, LUNA-PRISM, UST-PRISM, and then I think there was maybe one or two more. I’m not sure if xPRISM-PRISM was going to be one of the initial ones as well, that might have been the last one.
Yeah, no, that sounds right. And I think the reasoning behind that is just so you have… If you want to go between any two assets, you could just have to do a maximum of two swaps, one to PRISM, and then PRISM to your final asset. And I think that the cLUNA as well… Or the cAssets, if you want to call it that, it gives the Prism Protocol an accounting receipt mechanism. So they get an idea of the total amount of LUNA that’s staked with them. And similar to Anchor Protocol, if we’re familiar with slow burning our bLUNA back into LUNA 1:1, Prism should have a similar feature such that you can do the arbitrage, if you want, for cLUNA-LUNA and then slow burn it back to your regular LUNA token.
Yeah, that makes sense. That makes sense. So, well, yeah. What other basics do we need to cover before we kind of start jumping into strategies, right? We’re all here to obviously grow the DeFi ecosystem, but we’re all trying to make some money too. on the side while we’re doing it. We wanna talk about strategies. So yeah, I don’t know. Any thoughts on strategies, or have we covered all the basics, I guess, at this point?
Rebel Defi 10:10
I’m kind of interested in getting… How do we get our hands on PRISM? And how is PRISM going to sort of hold its… I mean, compared to many other sort of tokens that projects have, I think the value of PRISM is integral to how it was going to work. So I think it’s almost like its value is going to be stronger, or it’s gonna be able to hold its value from the initial release, or better than a lot of tokens.
Yeah, well, let’s jump into that, right. So Hyperion, in the last video that I saw where he was talking about it, was I think, danku, your video where you had Tundra from Nexus and you had, is it Joe from Levana? I’m not sure of his name, Joseph?
Joseph… Jonathan. I was…
Jonathan. Jonathan. Jonathan. Right.
I’m just seeing Joseph here in the people. [chuckle]
So at that point, Hyperion was saying that they’re going to do this Mango Markets to launch PRISM tokens, and that that was going to be about 7.5% of the total token supply was gonna go into this Mango Market. So if that’s still the case, do you want to explain that a little bit, danku? And if not… I did also hear a weird report just today or yesterday that even that has changed in the interim since you made that video, and maybe that’s not happening. Can you shed some light on that?
So I mean, I have on my side, the video ready, kind of explaining the four phases that he teased also on Tuesday in the interview, but I’m waiting to release this just because right now, I think that’s acceptable of an alpha to share. They’re kind of finishing the last touches of how it really will look like in terms of they’re still changing smalls things that kind of, yes, Mango Markets on a high level. I mean, maybe people just already witnessed similar to Mango Markets on Solana, it’s just a mechanism that a lot of protocols are using on Solana. So the idea is, you just have an amount of tokens, in this case PRISM, in a vault, and people can just add UST to it. In the beginning, the first, I mean, right now that’s information I have, from the first three days you can deposit UST or withdraw as much as you want. And then the fourth day, you can only withdraw UST. Something at least close to what we have seen from Astroport, but now an LP position is created. It’s just like in the end, how much PRISM is in the vault, which is right now my information is 70 million, how much UST in there, let’s say for an example 70 million, that would mean that PRISM has then a value of 1 UST. So it’s a derivative, I would say, of liquidity bootstrapping idea, but just more simple, right. And there are last touches that are done. This is phase number one. I don’t know. So he said on Tuesday that probably we’ll see this pretty soon in the next days, end of January.
Then there’s phase two, which is the IDO in the end. So you can then withdraw your PRISM from phase number one, and they have their own AMA, which is coming live. And then they have phase number three, where they activate the web front end. So you can stake your LUNA to cLUNA, and then refract it to yLUNA and pLUNA. This will be a phase of a few days so everybody gets familiar with it. During that phase, you can already stake your PRISM to xPRISM, and accrue values that are just happening because of swaps within PRISM, or also farming and kind of taxes and all this kind of stuff. Everybody can then go into the different LP pools, as you said, right, there is the pLUNA-PRISM, the yLUNA-PRISM and so forth. And then at the end, there’s phase number four, where you can farm PRISM. So you can deposit your yLUNA, and then you can get PRISM rewards. It will be probably over a year, vested linearly. And then depending on how much people are putting down their yLUNA, they can farm PRISM. Similar to I guess what we have witnessed with Apollo a few months ago.
Rebel Defi 14:01
Awesome. So can you give us a date of when you’re gonna be able to release your video? Or is that still kind of under wraps just now?
I mean, I could do it now, because the date kind of… This high level information I guess won’t change anymore. But I think I’m waiting just for Hyperion to say, “Hey, dude, those are the dates.” I understand, I think they’re coming with a Medium article. Because I think it makes no sense that I make a video and then kind of maybe it comes live at this day, maybe phase number three is five days, and then he goes live with the article five hours later. And it will happen in this way. So I’m just waiting to fill in the numbers and I’m really looking forward, I had a lot of fun making the video. Because I don’t know if you guys… Probably all of you have seen yesterday the marketing video of Prism. I wanted to sell my grandmother already just after seeing that one. Really cool.
Yeah, that was really impressive. I think they use the same company that TfL did to make their initial What is Terra videos. I think it’s called Breadnbeyond and it’s just so high quality. It looks really, really, really tight.
Yeah, it’s for sure that company because that name nobody can forget, right. It’s easy. [chuckle]
It’s a weird name, it’s a weird name. Yeah. No, it’s funny you say that because we’ve been talking about all these new protocols that are gonna launch after Columbus-5, like this Cambrian explosion of dapps on LUNA. And I think some of the LUNAtic crowd was a little bit disappointed that stuff didn’t start launching right away. But I think most of us that are in the space that are a little bit more mature, kind of know that these things still take time to develop and to get right, the launch and everything. But for sure of all of these applications, this has been the one that I’ve been the most excited about. Although, I still think Astroport and Mars are also really exciting ones too. But mostly because this is I think, real cutting edge innovation in the DeFi space, right. Astroport, great, it’s an awesome AMM, it’s taking some of the best ideas from Balancer and Curve and the other AMMs that had been ETH for a while, all their innovations and bringing that to Terra. Awesome. Mars is a money market that’s going to a add the functionality that Aave and a lot of other money markets that are out there have been adding to other ecosystems. But Prism per se, I feel, it’s just this whole new can of worms, and just opens up so many new markets and so many new strategies on Terra, that you don’t have anywhere else. I’m curious, is that kind of the thoughts that you guys have about this too? Am I on an island on my own kind of thinking this?
Jimmy, I don’t want to make it a monologue, right? Somebody take that before join the island of Sha.
Yeah. Yeah, I think it allows us to do some interesting things, right, like separate the risks, and of course, the rewards, and allows us to speculate on the individual components of these tokens, right. I know we’re launching with LUNA first. So we can chat about different strategies around pLUNA, yLUNA, and who would be best suited to do what kind of strategy. So I guess I’m curious, Sha, what what’s your kind of primary goal coming into 2022? There’s a lot of ways to make money, but what would make you I guess, most excited in how to use Prism?
Yeah, no, it’s a good question. And I kind of want to turn this around to everybody that’s on the panel that has a speaker access right now. And Cephii, I see you’re raising your hand, I’ll add on here in a sec. So one of the things… When Prism first started talking about what they were doing, my first thought was, “Sweet, there’s going to be an awesome arbitrage play,” because people are not going to know how to value yLUNA against pLUNAm and there’s going to be times where you buy one of them for a certain price, and then later you can sell it for higher or lower, right. I very easily envisioned that x plus y is not always going to equal one, and there’s going to be times where you can just buy one cheap and then sell it high later, right. Whether it’s the pLUNA at a time or you feel like, okay, maybe the market’s dumping and nobody really wants to have pLUNA right? Like on days like yesterday and today, maybe pLUNA has a discount and you buy it then, and then you can sell it for higher later. Or maybe when new apps start launching… Because I think people… A lot of us were… Okay, so there’s a lot of LUNAtics who, on Twitter, were like, “Oh, man, there’s gonna be this day where we’re just gonna have a full time job claiming LUNA staking airdrops, because every dapp is going to give us airdrops. We’re gonna have all this work to just claim all the airdrops.” and I think we’ve kind of seen that that hasn’t played out exactly like those people thought, but maybe we do start to see a bigger explosion of dapps launching later in the year. And a lot of them start airdropping to LUNA stakers. And that’s gonna obviously create a premium on the yLUNA price if you’re starting to get a bigger yield out of it all of a sudden, right?
So those are like my, I think initial thoughts. More recently when Hyperion started talking about LPs and dividing the LP into the principal and the yield, my mind quickly jumped to something… So I’m a huge LPer, and I’m really excited to hear LUNAomics talk about impermanent loss, that’s immediately following this Twitter Spaces, but my first thought was, “Man, what if that was available when I was farming the shit out of Valkyrie at like 10,000% APR, right?” And I could have instead of autocompounding it or whatever, I could have redirected that yield into buying LUNA. The price of LUNA was so low back then, and that APR was so freakin juicy, right? That’s the kind of opportunities that I think splitting a principle and a yield redirection kind of thing. I mean, kind of like the stuff that Sandclock and QUARTZ, what they’re looking to eventually do, but I think we’re going to have some opportunities like that already that Prism is going to allow, and some combinations that are going to be pretty cool. But that’s just kind of the two cents that I’ve been thinking about recently. I don’t know what do you guys think?
Sha, so… Jimmy, just give me quick… No, just quickly, you aped into Valkyrie? Sha, come on. In an LP as a validator. [chuckle]
I aped into what?
You aped into Valkyrie back then?
Yeah, of course, man. I’m a degen, dude. [chuckle] There’s nothing that says that a validator has to be responsible with his own money. [chuckle]
No, Jimmy, go ahead. Couldn’t hold myself back.
Yeah, I was gonna jump in and mention, we’re gonna take the whole scene around bLUNA arbitrage, and we’re just gonna turn it up 100 notches. And I think on launch, one thing that I’ll do is I’ll try to make a bot and I’ll release it to the public. So you guys can… You won’t need to know very much coding at all, you can just put in… Connect to a wallet… You have to be okay a little bit with having a separate wallet that may have their seed phrase exposed to the internet. But essentially, the bot will just try to run the cLUNA, yLUNA, pLUNA arbitrage to get you back to making some profit off of any kind of mispricing in the market when it’s volatile. So I’ll try to make that available for you guys just so everyone can
Rebel Defi 22:15
Sorry, sorry, Jimmy, that I was my mistake. I pressed a button. I think I just muted everyone.
No worries. Yeah, I was gonna make that available for everyone. And then secondly, I think the LP thing is super interesting. There’s so many ways we can chat about that one. But I think the simplest one is that when you split the LP tokens, the p token will only give you price exposure to the two underlying assets, right. As well as the impermanent loss that those two tokens may experience as their prices converge or diverge. But then the y, the yield-bearing part of the LP token, will give you access to the swap fees, and will give you access to any incentives coming for that pair, right. So you can imagine, I don’t know, some LP pair is doing 10% APR. And I think the way that the mechanism will work is that it’ll calculate essentially how much is being left in that pool, and it’ll burn those LP tokens, and then make them claimable for folks who stake that yLP token somewhere. And then lastly, it’s going to essentially pass through any kind of dual, triple, incentives that you might have, right. So you could get, say like the ANC-UST pair, you could be getting the ANC token, and you could be getting the ASTRO tokens on that, maybe there’s APOLLO token mixed in there somehow, perhaps that pair is also incentivized with PRISM, perhaps. So essentially, all of this is flowing into that one, yield bearing LP token, right. And so that essentially helps you separate all of the risks and price exposures that you might have. That’s already a lot right there. And I’ll kind of stop.
Dude, that’s fantastic. And I’m glad you brought that up, because think Hyperion talks about that a lot when he’s talking about the benefits of Prism. And he talks about maybe people needing like money right now, and so you sell one of these yield-bearing tokens that you have access to because you’ve Prismed, or refracted, or whatever, you’ve split some assets. And on a day like today, that makes me think of, okay, you’ve got a big Anchor loan, and you see that LUNA price is dipping, and you’re like, “Fuck, I gotta pay this thing back, right, or pay some of this back. I need some cash right now. But I don’t want to sell LUNA,” and then you’re like, “Okay, well, what if I take some of my LP positions, and I, whatever the word is, refract them or whatever, I split them in Prism, and then I find somebody…” Because I think Hyperion talks about, there’s perpetual splits, and then there’s like going to be eventually, like 3, 6, 9, 12 month splits, right? So you basically sell the yield for one of your LP pairs for a year, or for six months you sell the rights to those yields. Let’s say, you’re in the I don’t know, ANC-UST pool, right, maybe you’ve got a big position there. And you have those LP tokens staked in Astroport. So you’re going to be earning ANC tokens, and the commission fees, and Astroport tokens, and you can split that and you sell the yield for six months, to someone who’s like, “Yeah, I’ll take that yield for a little bit of a discount.” And then you immediately have some cash, you can pay off part of your Anchor loan, and you’re not selling anything, you’re just basically like selling the rights to future yields for six months or something like that. I think that’s such a powerful option. And such a powerful tool to just add to our arsenal of all these different levers and tools that we can manipulate to kind of make the best financial and strategic decisions.
Yeah, I think what is for me so interesting, and it’s cool to listen to you guys, because my mind doesn’t go what I can do, it’s more like what Prism can do long term. Because what you described, Sha, is also for us barely impossible to understand how something is priced. And I think Prism will show for a lot of people the first time truly the power of a free market. Because I personally when somebody says, “Oh, no, the price is bleeding, because of emissions,” or whatever. Well, I just say, “It’s the free market trying to find the right price.” The market is always right. And now kind of the market tries to find now the right price for a yield which is completely independent, right? Because the commission fees will be based on how much will be swapped, how much will be swapped will be based on market sentiment, in general, about sentiment about the protocol itself, about opportunities even to be swapped, how big the liquidity is, blah, blah, blah. It has so many factors that the true free market will find, or try to find, how to price this y and the p part, which I think is the most fascinating part about Prism, right? Seeing how the free market is truly becoming more efficient, because we can find more descriptions. Pecause price is just a description, right? And I think not a lot of people know, but I mean, in my legacy job, I was a pricing manager, right. That’s why I see price way more relaxed in terms of, it’s always right, right, whatever the price is, because the market is deciding about this, and we cannot change the market unless we restrict it in this terms.
So speaking of Valkyrie’s degen APRs and pricing yield-bearing tokens, so let’s just posit that the yield bearing LP token for any pair is worth 50%, right, of the entire LP token itself. So what you could do if you only want exposure to the yield and the swap fees and all the incentives, right, you could take your LP, you refract it, just sell off the principal component of the LP, right, so you now lose the price exposure to those two tokens. And now you can essentially get another yield-bearing LP token, right. So all your pLP, to the yLP, right. So now, what you’ve essentially done is you’ve doubled the APR on your position, right. And if you’re autocompounding that every day… You know what happens to really high APRs when you compound them daily, or continuously, or whatever, right. So now you can do that to everything… If you can do that every single LP pair, like your yields will start going through the roof, right. And I think that the landscape now is changing a little bit now. You can even think of this as a competitor to Spectrum. And you can think of this as a competitor to Apollo’s autocompounding vaults.
You just blew my mind on me.
Jimmy, can I ask you something else? Regarding the… What’s your intuition as far as the… So when you’re putting together an arb bot for the yLUNA-pLUNA pair, I’m presuming, what would you have the thing do? Would you basically try to have it sort of like, every time one of them goes up by a percentage, sell it and then buy the other? Or how do you first see the design of that?
Yeah, so there should be two scenarios, right. One where you are refracting, and then one where you are essentially minting, right. So if the individual components together are trading higher than the original components, so for example like let’s just say LUNA is back at $100, and then pLUNA is worth $55, and yLUNA is also worth, for some reason, $55. Then essentially, you can buy up as much LUNA off the market, refract it, and then just sell the components until the prices are back at parity, right.
But do you feel like… How tight you do you think the arb ends up becoming though, right? Because in theory, if I were to split my LUNA into pLUNA, yLUNA, just fresh LUNA and you just split it, you’re getting one of each, I think, right? And then when you go backwards, you’re going back to one LUNA. So why wouldn’t the arbitrage be so aggressive, let’s say, that you wouldn’t end up pegging sort of like, one to one yLUNA pLUNA, ultimately. And then the flip side, like you said, like once the arb bots are sort of running, it’s… Or at least people are just arbing naturally, wouldn’t you see everything just sort of go back to one to one, ideally? Or what’s your thinking there?
I think there’s going to be market forces, right, speculators. Some people who, maybe 8% yield on their LUNA is not very exciting to them, but they believe that we’re going to be seeing $10,000 LUNA in the next year, or next couple of years, right. So forget it, they’re gonna buy up as much pLUNA as they want, they don’t really care about what the price is. Currently, they just know that they’re getting essentially liquidation free leverage on the price exposure of LUNA.
So you’re not sure in your head which will be the more sort of popular version of this? We’ll have to just see where it goes, obviously.
Yeah, we don’t know. So we have speculators. And then you’ll have these spot arbitragers, who will essentially try to keep the markets essentially solvent and try to keep the peg there. So I think we’ll see a lot of volume from these arbitragers just trying to keep price parity.
And with sufficient volatility, that’s what I was thinking of, we don’t have sufficient volatility in things that trade in opposite directions on-chain. But when I was talking to the different groups about building on-chain arb bot platforms, what’s really interesting to me is just the… With enough volume, you could make a ton of money just literally off the yLUNA pLUNA… Like a simple 50:50 rebalancer, almost. Or for that matter, maybe you do the same just being in the LP. If the transaction volume is really high due to botting and everything else, then in theory, you could actually do… Maybe those LPs will do just fantastic. Just the 50:50 LP maybe. I don’t know.
I think that’s got to be the case, right? I mean, I think people are not going to know how to price this stuff. I think little bits of news could easily change the balance between pLUNA and yLUNA, right? Well, let’s say some new app comes out, let’s say Mars can even just make an announcement. I mean, they can manipulate these markets too, right? They say, “Hey, we’re gonna for sure airdrop a ton of Mars to all LUNA stakers,” right? Or two apps come out the same week and say that. I’m sure people are going to speculate on that news and it might change the balance a little bit, create more trading, right, make yLUNA a little bit more valuable at the time the announcements are made. I mean, how much LUNA was staked to Orion, right, just because they said “Hey, we’re gonna give you an airdrop,” right? No one knew how much it was gonna be, and at the end I think a lot of the community felt they just dangled this carrot in front of them for months and months, and they got pennies. But it shaped the way people… What they did with their LUNA right?
Yeah, totally. It seems like the volume back and forth is just going to be outlandish, which is enticing to me. Anyway.
Yeah, me too, man. I mean you popularized the LUNA-bLUNA arbitrage play and I feel like so much of us are taking it… So much of the community is taking advantage of that when it’s available. Like today, I’m sure most of you on the call noticed today that there was… It has been pegged so tightly for the past week, right, that people thought that play was gone, and then today kind of came back to where you can get 1.5%, 2% at different times today. And I feel like that is this play that’s been available to those of us LUNAtics that got in early, that understand how LUNA works, and bLUNA, and have been able to to take advantage of that play. And I feel like maybe this is gonna be the same thing with Prism, and pLUNA, and yLUNA, right. Those of us that are here on this call, that are planning, that are thinking about Prism, that will understand how it works on launch, are going to use bots, or be at least in the pLUNA-yLUNA LP pairs and take advantage of all the trading arb opportunities that are going to be there.
Rebel Defi 35:16
Awesome. Thanks, Sha. We’ve got LUNAomics up as a speaker. We’ve got 15 minutes or so left. So there’s a few people with questions, we can maybe take them. But yep, LUNAomics.
Hi, just a quick idea. I was wondering if… Just a request, but one of the things that I’m looking forward to with Prism is a transparent indicator into market sentiment. Because when the community feels that it’s going to go up in price, you’re going to have more people buying the pLUNA, and when the community is more bearish, people are going to be buying the yLUNA. So there’s going to be this skew according to market sentiment. And because it’s being done with real money, I think it would be the most accurate market sentiment indicator. It’s almost like the VIX for the S&P 500. Prism could provide an indicator that… It has the same kind of value that the VIX does in the regular market. And so my request, if at all possible, I think it would be really cool that on the dashboard of Prism, there would be like a running ratio of the skew between pLUNA and yLUNA, and have that on the same graph as the price of LUNA. So then you could see the correlation between the price and then the market sentiment. And you could almost make extreme sentiments matched up with the highs and the lows of the price of… LUNA. Excuse me.
That’s a great thought. Because I don’t know if anyone out there in the audience has used prediction markets or looked into prediction markets. But there’s such powerful tools. And you’re right. I mean, this could essentially be a prediction market to tell you what the sentiment is on the price action of LUNA, right?
Yeah, I think it could be one of the most accurate. I mean, I love using the VIX. It’s so easy to pick market bottoms when the VIX reaches a high, when it gets to above 50. And then you can just start picking up S&P contracts, or selling puts or… Those have been my most profitable plays as a trader. And I think if we had something similar with LUNA, it would be a really powerful tool for people who are trading it.
One thing that I did read the other day is that… And I think Hyperion mentioned it on the podcast with Jose on Delphi Digital, is that they will have limit orders as well. So I think it’ll be interesting where you can have your own idea on what pLUNA or yLUNA should be priced at, and what price you want to get in at. And you just go ahead and put in those orders. And I think it’ll be a little bit more… The way that I’ve seen is that it’ll be a little bit more efficient than what we have with Miaw Trader, where I think they just have the bot that runs these orders. Whereas on Prism, they will incentivize people to run their own bots. And if they successfully run the trades, they get a portion of whatever the swap fees or their limit order fees are. So I think it’d be really interesting to see how this plays out on their platform. And I think I can see if I can put in a word around having some kind of sentiment or being able to see multiple prices at one time on their trading platform. Because I know right now Coinhall has done a lot for us, but now that we have so many DEXes, it is a little bit painful to use.
Rebel Defi 39:12
Thanks, Jimmy. We’ve got Mindset with a contribution. So I’ll bring him or her up, and then maybe go to Eager Crypto, who I think has something to say. Okay, Mindset, you should be up, or connecting. And Eager Crypto, did you have a question or contribution you wanted to add?
Eager Crypto 39:30
Sure. Yeah, it seems like Prism is going to be interesting because it’s a new foundational source of stable yield. And that’s really what made the entire Terra ecosystem take off with Anchor. And so the market, I guess, as it’s been quoted is $600 trillion around interest rates speculation in traditional finance. So, anyway, I think this will be an interesting tool to keep our eyes on. One question I have is the initial pool are going to have PRISM as the base pair. And I’m not sure if Jimmy or anyone knows, and I think the value or the reason behind that is because it makes the PRISM token more valuable. But it seems like that’s the way that Nexus launched. And it didn’t necessarily make the Nexus token more valuable. So any comments on that?
Yeah, I think that’s something that will be really interesting to see, right. So I think the pair itself is not terrible, right. I think with Osmosis, or say, THORChain, we have these other DEXes are paired with… Or even Loop, right, there’s a lot of pairs for the governance token or the native token for that platform. But it really is a balancing act between not only the pairs, but like the utility of your token, right. What are your emissions like? And from what I know, all of the utilities, like the staking, and PRISM, xPrism, all of the utility for PRISM will be out pretty soon at launch or right after launch, and week after week after week. So we won’t have the situation where we kind of see with ASTRO where most of the DEX launched, but then all the governance and all the cool things that we can potentially do with ASTRO won’t be coming until few weeks, months, in the future.
So yeah, I totally agree that you’re facing potential impairment loss risks if you decide to LP these pairs, right? But I think that with the the Mango style launch, or Prism forge that was on danku’s PowerPoint is that, they’re trying to raise a lot of those funds so they can seed all the pairs themselves. And there’s going to be enough liquidity to facilitate all the trading and all the speculation that we want to do, even if we decide not to jump in and LP these pairs. So I don’t think we’ll see ridiculous APRs on these pairs when Prism launches, not like we saw with Valkyrie or any of the other protocols that are launched. But there will be an opportunity for us to take advantage of the utility of Prism, and farm the PRISM tokens, right. I think the very last phase is, okay, now that everyone has their hands on a little bit of pLUNA and yLUNA, you can use your yLUNA and you can jump into their farms. Similar to Apollo’s community farming event, where you put in your LP tokens, and then the yields are swapped for that particular token. In the past, it was Apollo. And we also had the HALO community forming event. But I think the biggest pain point that most of us had when we entered those pools is that we suffered some impermanent loss, right. We all jumped into MINS, we saw some crazy price action on it. Or we jumped into the ANC-UST pool, we suffered some price action impermanent loss on that. But with this yLUNA farming event, we can get our hands on PRISM by just staking our yLUNA tokens. And with that alone, we’re giving up our yield, there’s not going to be… I mean, that’s not an LP token, right? But essentially, we’re not subject to any kind of permanent loss. And we’re kind of utilizing the power that Prism and the utility of Prism will allow us to do with many, many other protocols in the future.
And we’ve seen that kind of launch, right. Stader has done exactly the same. Phase four is basically Stader’s launch.
Yeah, that’s a good point. I mean, I like that model a lot. Even though, I don’t know, it doesn’t feel like you’re really giving up a lot to farm the tokens from my perspective, like for Stader… I know you’re giving up yield that you’d otherwise be getting from staking LUNA, but it doesn’t really feel like you’re reaching into your own pocket to pay for something and that’s kind of the cool part about it. What do you guys think about the Mango Market as a launch? I’m just curious. We described what at least is supposed to happen. What do you guys think about that? How do you compare that to other things that have done a liquidity bootstrapping pool, like White Whale? I’m just curious other people’s thoughts on that.
I have some thoughts, but danku you, I’m gonna jump in?
No, I don’t comment anymore on launches. Because the only…
Come on, give us some sound bites that we can blast on Twitter, danku.
Take a look how this is, right. If the protocol airdrops a ton of money for free, which obviously goes then into a little bit of a negative price action afterwards, everybody says, “Bullshit launch.” If a launch kind of a protocol doesn’t do it, and then kind of has low liquidity in there and the price then skyrockets, but then later on it goes down, everybody says, “Bad launch,” right? Whatever you do, somebody will have something against it, right?
Oh, yeah. We know. There’s no right answer. That’s 100%. Sure, especially this community will rip you apart for anything that you do. But that being said, I want to hear some more commentary. Jimmy, what you got?
So I think we’ve seen an evolution of launches on Terra, right, within the last year. I think things started off with Pylon and StarTerra, where if you were the fastest, you make a lot of money, right. And of course, there’s been a lot of community feedback and kind of frustrations around that. And then, with the launch of a few protocols now, like we had HALO, and White Whale do the LBP, and then you also had Astroport do their Lockdrop. So now we’re getting rid of… You won’t be the biggest winner if you’re just the fastest, right? So now they’re kind of getting rid of the bots, and essentially trying to create mechanisms that incentivize more fair price discovery. So with LBPs, I’m a big fan of LBPs. But I can understand that, with LBPs and the Lockdrop, there’s a lot of decisions you feel like you have to make over the course of those few days, right. You’re not exactly sure at what price you should get in. And the worst thing an LBP is if you get in too early, even though you feel like you’ve waited long enough. And then the price just keeps continuing to drop and drop and drop, right. So usually the strategies around that it’s just to DCA in.
But one of the things that I think that Prism is doing that is kind of interesting with these Mango Markets style launch is that it’s really reducing the number of decisions that you need to make and trying to make it as most fair for all the participants, while also generating the liquidity and raising the funds needed for the protocol to essentially function, right. So if everyone just puts in their UST for the first few days, the final price is essentially the amount of tokens minus the amount… Or just divided by the amount of UST is in these pools, right? So everyone has the same price. So my hypothesis is that you won’t see a lot of speculative price action right off the bat, since everyone’s essentially has the same playing field, there’s no VCs for Prism, none of the tokens are unlocking. So if the price pumps or dumps, that’s because everyone just dumped on each other, I guess, I don’t know. I think on the final day, I think they’re taking some tidbits from Astros’ final days, as well as taking the frustrations that people had on Solana Mango Markets, where whales would be essentially manipulating the price, right, by just putting a whole bunch of UST, a whole bunch of money in that they never intended to actually come in, right, and that the final moments they’re pulling it out. So I think for the final day, there’s going to be some kind of mechanisms similar to Astroport, where the amount of UST that you can withdraw out of that pool decreases over time. I believe there’s a limit as well on how many times that you can do this.
Yeah. It’s interesting, because I was thinking this through myself when Hyperion was talking about how they’re launching. And I’m a big fan of the liquidity bootstrapping pools, I feel like it’s a way to essentially fuck the bots, and also make it so that it’s more fair for everyone. Because you basically have to kind of decide when you feel like is a good time to get in. And like you said, Jimmy, I think it makes people kind of DCA in a little bit, but it also makes people really think about it, and not just kind of blindly do stuff. I guess this is more fair, because you’re right, everyone’s kind of getting the same price. But I do feel like it’s not the most efficient because you don’t know what price you’re going to get at. You don’t know what the final thing is gonna sit at. And yeah, you’ll have the opportunity to pull some money out if you feel like the price is not where you expect it to be. But I don’t know, personally, I was a little bit disappointed to hear that it wasn’t an LBP and that it was going to be this way. But at the same time, I think it’s good to have different ways of trying to launch tokens on Terra, no one’s done a Mango Market before and so we’ll see how that plays out. We’ll have some data to kind of say is this a better way to do it than the LBPs. So I guess we’ll see how it plays out.
Rebel Defi 50:02
Awesome. Well, we’ve got about another four minutes before we will be calling an end to this. danku, do you have any closing comments? There’s couple of guys with questions.
Yeah, I mean, I think we haven’t talked about, and I said earlier, so as I don’t trade and I don’t kind of have personally interests kind of in taken advantage between the y and the p, and I’m looking forward to the bot of Jimmy to do the work for me. I think I’m more kind of intrigued by Prism with what it could do for the ecosystem, right. So thinking about Kinectic Money, right, where you can basically have self repaying loans. What if Prism just provides the yield part of a token for Kinetic Money so you don’t even need to give away your full token so that it can sort of repay your loan just with the yield part. That’s the interesting thing. And I think Terra is prepared with a lot of yield token like aUST which is just the king of yield tokens with 20%, right, steady, to make cool stuff, and Prism can help to make that happen. And stuff that we don’t see right now. As I said, Kinetic Money could do crazy things, and probably a lot of other people in the future as well.
Rebel Defi 51:06
Seems like danku may have already made it. Not caring about price makes me think there must be lots of money in the bank somewhere. Right, that looks like LUNAomics has started up his space. So a couple of minutes left. Jimmy hope you have a lovely day doing what you’ve got to do in the real world. Sha… We’ve got Eager Crypto with his hand up, you want to come in for a final word?
Eager Crypto 51:26
I was just gonna say another interesting side effect of Prism is that governance votes will become more important because of speculation on the yield of LUNA. And so that would affect greatly the yLUNA token. So anyway, just like the Fed when they change interest rates, that’s a huge ramification for the markets. But anyway, that’ll be another interesting side effect of Prism, I think is we’ll probably all be keeping an eye on those governance folks that come out that might change the the burn rate of LUNA or something like that.
Yeah, exactly. I mean, rewinding time a little bit, the Ozone burn, right, if Prism was around before the Ozone burn happened, and people knew how dramatic that was going to change the yield on LUNA. I mean, I think we would have seen the Prism markets go ballistic, right, and a lot of trade action between p and y LUNA, so some interesting implications on how yield is going to affect the markets. Hey, guys, thank you so much for coming on. I know Pat T Nick, you’ve patiently been waiting, but we just don’t have time for questions and we want to open stuff up… Or free people up to go join LUNAomics talk on impermanent loss and LPs. But thank you, everyone for coming out. Jimmy, danku, Cephii, for your thoughts. And we’re going to continue to do more of these Twitter Spaces. We may even… We have a new Discord server that we launched in conjunction with LUNAomics. And it’s basically like LUNA strategies. Specifically LUNAomics has a couple channels that are dedicated to his specific strategy and how he grew $6,000 into over $2 million over the past year, doing his particular LUNA strategy. So feel free to join our Discord server, we’ll probably start a channel to start talking about Prism strategy since we’ve kind of got our minds percolating about what this is going to be like later this month. And thanks again for tuning in. We’ll keep doing more of these. I think that’s all I got.
Rebel Defi 53:21
Thanks, guys. Good night.
Take care, bye-bye.
Thank you. Bye.
Thanks for checking out another episode of The Ether. That was the Prism Roundtable hosted by Orbital Command and a bunch of friends. 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. Find out more at orbitalcommand.io. TerraSpaces appreciates their support. For terraspaces.org, I’m Finn. Thanks for listening.