I have been looking at options to investing in UST and Luna via multiple options. Whether it is swaps or bridges or exchanges each has their benefits and drawbacks. Out of all the different options my personal belief is that bridges are the best however they are limited to specific blockchains. In this post we look at the options available and get to my reasoning why bridges are preferred.
Token swaps protocols such as Sushi Swap or Pancake Swap are pair tokens pooled together for users to trade in and out. The liquidity providers earn rewards for placing their assets in pools while investors can easily at any time move from one token to another by paying a small fee. Some liquidity pools are paired up with same token but on different blockchains.
On Sushi swap traders can link their Metamask wallet and convert USDT in the wallet blockchain they have into UST. The UST can then be transfer over to your Terra Station wallet. All in all there is fee in the trade from USDT to UST but no fee with withdrawal. One element that is difficult and sometimes forgotten is that certain tokens maybe on mulitple blockchains but you will have to figure out which one to deliver to. For instance USDT is on ETH different than USDT on Tron but they are equal in value.
The different USDT is because each blockchain has it own way of interpreting the tokens on its blockchain. This is a good segway into bridges. In bridges such as Terra Bridge users have the token they want to move from one blockchain into another. Yet the token has the same value whether its one Terra or on Ethereum.
The trade is instantaneous and fees is only in the form of gas depending on which original blockchain doing the transfer. In picture above if we were to exchange UST from Terra to Ethereum we would pay Terra gas fees. The transfer will require Ethereum wallet but the UST can be used on the Ethereum protocols. Vise versa convert UST from Ethereum to Terra one would pay Ethereum fees to transfer the UST to their Terra Station wallet.
The major differences between a liquidity swap pool and a bridge are the following:
Bridges if not using Ethereum as the originator will likely incur the lease amount of fees since the user is basically spending gas fees to move tokens from one blockchain on to another. While swap pools is like trading one token for another that will create a trading fee and then is needed to transfer over to blockchain wallet of desire.
Another way of obtaining Luna and UST is through exchanges. There are multiple exchanges that offers Luna and UST but I do not recommend the use of these unless it is the only resort. In all likelihood there are liquidity pools that offers opportunity to buy Luna and or UST that offers less fees.
Again exchanges are not ideal choice to convert to UST or Luna but they are an option. The reasons are you will have to pay trading fee and withdraw fee. One of the more popular exchanges to trade the two tokens is Kucoin and I know first hand that withdraw fee for Luna is 0.1 while UST is 4. These add up if you trade in and out of Kucoin with those tokens.
Ideally bridges will cost the least while centralized exchanges will cost the most. The middle ground comes in as decentralized exchanges such as the liquidity swap pools. Here is an example of turning your Hive into UST through a liquidity swap pool and the steps.
First have swap.hive on Hive-Engine.
Second trade the swap.hive into Leo tokens either through Hive-Engine trading or through https://beeswap.dcity.io/swap.
Third have a BSC wallet and link it to Cub Finance
Trade the Leo into CUB as wrapped Leo and swap it through Pancake Swap.
CUB to UST in example above and you can move UST via Terra Bridge from BSC to Terra.
That is it! We used liquidity pool and bridge to convert Hive into UST but similarly can be done for Luna.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
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