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Understanding Tokenomics in Cryptocurrency

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Understanding Tokenomics in Cryptocurrency

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Questions and Answers

What is tokenomics?

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

What document outlines tokenomics?

A white paper (correct)

A blue paper

A green paper

A yellow paper

What is TerraUSD?

A cryptocurrency

A stock

A bond

A stablecoin (correct)

How is TerraUSD kept close to $1?

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

What kind of opportunities does the tokenomics system create?

Low-risk gains Signup and view all the answers

What is the purpose of a white paper?

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

What is the purpose of arbitrageurs in Terra’s ecosystem?

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

What color paper outlines tokenomics?

White Signup and view all the answers

What type of asset is TerraUSD?

Stablecoin Signup and view all the answers

What is used to keep the price of UST close to $1?

Arbitrageurs trading it for LUNA Signup and view all the answers

Study Notes

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.

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Description

Test your knowledge of tokenomics, the principles and rules governing the design, distribution, and use of cryptocurrencies, often outlined in a white paper. Explore how stablecoins like TerraUSD (UST) rely on arbitrageurs to maintain price stability, appealing to investors for low-risk gains through arbitrage trading.