The original mechanism of #微策略募资支持比特币战略 was to buy 1 USD of LUNC and throw it into the smart contract to burn it, generating one UST for you.
Conversely, throwing one $USTC into the smart contract to burn it will generate an equivalent of 1 USD for you.
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Does this sound familiar? 🤷🏻
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Later, LFG (Luna Foundation) took all the money to buy $BTC, purchasing around 2 billion, as a liquidity enhancement guarantee for UST. In fact, by that time, it was nearly dead, and the outcome is well known.
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MicroStrategy is just the US stock market version of Luna, but the gameplay is slightly different.
MicroStrategy and the early version of Luna may not be very similar, but later they became quite alike, although the redemption order differs.
In MicroStrategy, when redeeming, if the MSTR price is above the strike price, you can choose to exercise that call option, and then MicroStrategy will issue more MSTR to you.
In the Luna system, MSTR = LUNA.
If you want MSTR without being forced to sell coins, then MSTR's price must look good, so that all the selling pressure from redemptions is absorbed by stock investors.
New debt pays old debt; can there be an eternal flywheel?
Because convertible bonds have an expiration date, there will be issues of new and old, but actually, LUNA also has new and old issues.
Why, in the later stages, did LUNA's flywheel stop rolling? Why didn’t everyone buy LUNA to allow the earlier UST to escape? Why didn’t everyone buy BTC and push the price of BTC up, so that nobody would die together, and there wouldn’t be a bear market in 2022?
Because everyone would panic; they cannot trust the person across the table, who is also at the gambling table, willing to go (3,3) with you.
From the small-scale (3,3) game FriendTech, even though everyone kept calling for (3,3), in the end, it still resulted in a mess; to large-scale economic recession, there are some causal economic tools that you can use, you can keep squeezing the interest rate to 0, or even negative, and then go for crazy easing, but unfortunately, it is still on its last breath.
Economics is not just reaping what you sow.
Returning to the MSTR issue, will there be successors to fill the gaps of newcomers in the future? A big question mark.
These questions will not be thought about by anyone; they will only come to review what major mistakes we made when the price approaches the bottom. But reviewing won’t help; Bitcoin has its own cycle, and MicroStrategy hasn’t changed anything, it has only accelerated and intensified this process.
The old man is now beaming, just like DK back then.
