Analyzing LUNA/UST pair

Terra is one of the most promising cryptocurrencies at the beginning of 2021. We recall that Terra was designed in order to create a blockchain focused on generating a stablecoin that can be used worldwide in e-commerce, to promote the digital payment of cryptocurrencies.

One of the most interesting parts of Terra is one (basically the most important) of its stablecoins called Terra UST, which together with the network’s native cryptocurrency called LUNA, form a very interesting and utilitarian pair that we will see below. UST and LUNA work in tandem to create and burn UST and achieve stability (1:1 with the USD) algorithmically.

UST Stablecoin

On other platforms, stablecoins must be obtained by collateralizing the loan. IN contrast, UST is a stablecoin that is generated by burning $LUNA tokens equivalent in USD. This is the process called Seignorage. Thus, when you burn $LUNA you get the US dollar equivalent in $UST.

What this mechanism has in common with DAI is that it achieves stability algorithmically by expanding or reducing the monetary base with incentives. These incentives are burning USTs or creating new USTs, which is basically creating new $LUNA or burning them.

And how is stability achieved? It is achieved by incentivizing the market to burn or create UST and thus increase or decrease the UST in circulation to achieve stability.


If we go into detail with the daily swap of the LUNA/UST pair, where we can observe interesting data that make us see how the UST has a very good use. Thanks to the data extracted from Flypsidecrypto ( from today at 00.00 am until now, we have that a total volume of 3908,45 uLUNA and a total of 171468,6 UST has been transferred (buy/sell and burned) which means that there is a huge volume of transactions in this specific pair LUNA/UST and indiciating that the token has its utility and it is implemented as expected. Here I show you the different swaps that take place during the day for both: uLUNA to UST (first graphic in blue) and UST to uLUNA (second graphic in orange):

As we can see, there is an inverse correlation between them. It happens always or it is only a coincidence? We will need to analyze more days in order to make some conclusion about that! You can try it if you can and share your thoughts and comments below.


Terra/UST is one of the most interesting and important pairs inside the Terra Luna Ecosystem. As seen in the previous graphics, in less than half a day a huge quantity of uLUNA and UST has been swapped and it is due to for people this pair is essential. Besides, we have to take into account that we need to study further this information and make a good analysis about how this pair could increase by the next month and with the growth of Terra ecosystem. In a couple of month I will bring you another post about it and we will analyze how has been this growth and how may affect to ecosystem.

Analyzing LUNA/UST pair was originally published in DataDrivenInvestor on Medium, where people are continuing the conversation by highlighting and responding to this story.