The bearish case for $LUNA is that both of its two major apps, @mirror_protocol and @anchor_protocol, are heavily relied on token incentivization, to the extent that I think they may not even work once token emission is significantly reduced.

1/n
Unlike Synthetix, trading of Mirror mAssets requires deep liquidity pools.

Providing liquidity for mAssets itself is not a particularly attractive option to many investors, because one needs to have 50% exposure to a depreciating asset (UST), while taking on the risk of IL.

2/n
LP is currently very lucrative thanks to the $MIR incentivization, but far less capital will probably be in the pools once token emission is reduced in 3 - 4 years.

With shallower pools, users are better off trading with zero slippage at Synthetix.

3/n
The problem with Anchor is more profound. Borrowers currently have to pay a 35% APR, while forgoing yields on their collateral.

At the current $LUNA staking rate (6%), a borrower who maintains a 1/3 LTV is effectively paying a 35% + 3 * 6% = 53% interest.

4/n
This is quite possibly the worst option to borrow stables in DeFi.

In comparison, Compound is currently offering $USDC loans at 4.6%.

Even better, deposit UNI-V2 LP tokens at Maker and mint $DAI at 0% interest rate. You even get to keep those LP yields!

5/n
Borrowers at Anchor are happy now because they are gifted tokens created out of thin air. But what happens when token incentivization is reduced in 3 - 4 years?

Without borrowing there is no yield for lenders. Everything that is built upon Anchor breaks as well.

6/n
I hope the devs are aware of these issues and improve the protocols taking these into consideration.

fin/
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