Understanding Tokenomics in Cryptocurrency

• 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.

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.