Luna is finally getting a red day in this current cryptocurrency market, but it is still ranked 6th in overall market cap based on coinmarketcap.com. The staking of Luna is also running hot as it is second and getting close to first place Solana. With a little under $2 billion between first and second in staking value Luna has potential to surpass Solana very soon, but for those wondering if its because its due to rising price of Luna, I am here to explain there is more to it.
Terra Protocols
In late 2021 there were less than 15 protocols running on the Terra chain. Now based on DefiLlama it is at 22, but there are more coming live in 2022.
There are multiple protocols that are luring in Luna investors to staking their Luna to rack in more yields. Today we look at several of the most popular ones and why they are so attractive.
Nexus
Nexus has been out since late 2021 but right now it is allowing Luna stakers to earn over 10% yield in PSI, native token of Nexus, and have receipt token nLuna to pool in and yield as much as 400% on Spectrum protocol. Lets look at how the process all works.
When an investor converts their Luna to bLuna over on Anchor protocol they can stake their bLuna and begin borrowing against the bLuna for a yield in ANC tokens and have liquidity UST to invest in. Some will use the UST to put into the 19.5% yield called EARN. The borrower will have to watch their borrowing to avoid getting liquidated.
Nexus protocol will do all this for the investor automatically and provide services to automatically avoid liquidation and still provide a yield for the investor. The yield is in PSI tokens but investors can sell the PSI for UST and swap the UST for other Terra assets on Terraswap or Astroport.
In addition to earning a yield on Nexus the investors get the same amount of nLuna that they staked bLuna on Nexus. Then with a 50:50 pool of nLuna and UST investors can farm on Spectrum protocol to do an auto-compound to yield over 400% in returns a year. For long term holders of Luna this is a great way to stake Luna and earn.
Prism Protocol
Over on Prism investors can split their Luna into a yield barring and principal Lunas. These are yLuna and pLuna that originates from cLuna. What investors do is convert their Luna into cLuna and then from there able to split cLuna into yLuna and pLuna.
The broken components of yLuna and pLuna each have their own ways to earn yields. For instance they can be placed in liquidity pool with Prism's native token Prism or stake yLuna to earn more yLuna and pLuna.
Conclusions
All these different ways to earn a yield for staking Luna may seem odd but there is an interesting part to it that makes staking Luna all the more attractive. Both bLuna and cLuna originators of assets to partake in Nexus and Prism respectively are actually staked Luna on the Terra chain done by the respective protocols. In return the protocols offer bLuna and cLuna investment vehicles to earn a yield for investors. These yields can be much more lucrative than simply staking Luna directly on the Terra chain. Imagine staking bLuna and then pooling cLuna for a grand total of over 400% on a supposedly native chain token, who would not like that?
The allure of Terra protocols providing creative ways to create yields for investors is pulling in more Luna to be stake. In the meantime there are plenty of Luna burned daily to convert into UST to lower the supply of Luna even more. This is all bullish for the price of Luna.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
LeoFinance = Financial Blog
LeoDex = Hive trading exchange for Secondary Tokens, Low 0.25% fees for deposits and withdraws.
HiveStats = Hive stats per user
LeoPedia = Informative content related to anything about Crypto and how to make financial gains in crypto!
CubDefi = LEO Finance's Defi with CUB Token