Prism Splitting Crypto Assets (Terra Network)

A first if its kind that I have seen is a protocol that breaks up a cryptocurrency in its yield bearing part and its principal part. The new protocol called Prism has been running for a couple of days now and it is making a lot of noise.

Luna Into yLuna and pLuna

https://prismprotocol.app

In Terra blockchain Prism will allow users to split their Luna into two components. First is yLuna and second is pLuna. yLuna is the yield Luna gets per a year from simply staking the Luna, while pLuna is the principal Luna that allows holders the governance right to vote. This whole breaking up cryptocurrency assets is the first that I have seen and opens up a whole world of possibilities. In the future Prism hopes to be able to break apart many other Terra tokens into a yield bearing asset and a principal bearing asset.

Why Split Luna? Or Split Any Other Cryptocurrency Asset?

There has always be the race for yield when it comes to investing in cryptocurrency. Having the asset split into separate buckets allows another opportunity for people to chase for better yields. For the current market conditions those who have refracted their Luna into yLuna and pLuna can then trade of stake the separate tokens as to earn more.

Outside of Prism there will be future protocols that will incorporate the yLuna and pLuna in its platform making use cases of the split tokens. Enabling investors to take advantage of each part of Luna to invest in to maximize gains. In example of pLuna, coinhall.org has setup its subscriptions to accept pLuna as it provides them governance vote.

The best part of refracting Luna into yLuna and pLuna is that users can still use it in the form of a token to be traded and make price speculations. The actual Luna is staked into the Terra blockchain. In other words the Luna is locked and can only be unlocked after 21 days of slow burn. Instead Prism will enable users who want to lock their Luna to have the opportunity to do so and still have liquid assets able to use to invest in other projects.

Can Other Projects Refract?

The simple answer is yes and we can look at Hive for instance. Hive my nature is inflationary but it also gives voting power when staked. If their is a way to divide staked Hive into parts such as yHive and pHive we essentially have the same going on as Luna broken out as yLuna and pLuna.

yHive can be the yield bearing asset that increases for holders while pHive is the staked Hive that gives voting power to its holders. Of course there are the finer details to breakout such as how much is yHive versus pHive within the actual Hive when broken up? In Luna's case it is currently having close to a 3 to 1 ratio benefiting yLuna.

By no means does this mean yLuna by default is worth more than pLuna but current market conditions has people bidding more for yLuna. Ergo Hive can have some similar breakout but only the market will decide what that is. Instead the assts yHive and pHive would be liquid tokens of its staked Hive Power. The former tokens would be provide additional opportunities to holders to invest in other projects.

One final note:

Merging yLuna and pLuna will result in cLuna. cLuna is staked Luna and requires 21 days of slow burn to revert back to Luna. In similar but likely longer slow burn for Hive is that the yHive and pHive requires 13 weeks slow burn to go from cHive to Hive as cHive is staked Hive Power.

Conclusions

What I draw out of Hive being able to refract can be any other token that can be staked. The breakout of the staked asset's yield bearing and principal asset it is clear that we can see a lot of potential for it to work on many different cryptocurrencies. Terra is far in advanced to making many new forms of protocols that I have ever seen. Stader is in itself amazing enough by allowing investors to stake their Luna and have the Luna be liquid at the same time. The liquidity they created is LunaX.

Now Prism has not only broken out staked Luna into liquid assets, but it has broken the liquid assets in its yield and principal. A lot of chains have opportunities to stake their native tokens. To also have a way to provide liquidity to the staked tokens and split them up into yield and principal portions is the next level. One that Terra chain already has in place.

None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!