Understanding Tokenomics in Cryptocurrency

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The set of principles and rules that govern the design, distribution, and use of a cryptocurrency (correct)
The set of principles and rules that govern the design, distribution, and use of a stock
The set of principles and rules that govern the design, distribution, and use of a bond
The set of principles and rules that govern the design, distribution, and use of a commodity

By arbitrageurs trading it for LUNA (A) Signup and view all the answers

Low-risk gains (A) Signup and view all the answers

To explain the proposed cryptocurrency and how it and any underlying technology will work (A) Signup and view all the answers

To keep the price of UST as close to $1 as possible (C) Signup and view all the answers

White (A) Signup and view all the answers

Stablecoin (D) Signup and view all the answers

Arbitrageurs trading it for LUNA (A) Signup and view all the answers

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Tokenomics is the set of principles and rules that govern the design, distribution, and use of a cryptocurrency.
Tokenomics is often outlined in a white paper, which is a detailed document explaining the proposed cryptocurrency and how it and any underlying technology will work.
One of the main stablecoins in Terra’s ecosystem, called TerraUSD (UST), relies on a network of arbitrageurs, who swap UST with another of Terra’s tokens, LUNA, to keep the price of UST as close to $1 as possible at all times.
This complex tokenomics system appeals to investors because it creates accessible opportunities to make low-risk gains through arbitrage trading.