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Monitor LUNC/USTC onchain vs offchain Divergence #1216

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opened 2026-09-09 05:56:27 +00:00 by LVS · 5 comments

LVS commented

2026-09-09 05:56:27 +00:00

A place for us to monitor and collect data for the purposes of future Liquidity discussions

09/09/26 - SpaceRaider - ustc got a massive sell-off on astroport which made ustc price drift 11% before partialy correcting itself. (onchain :100lunc/1ustc
on centralized exchanges 105lunc/1ustc ,5%), so now we are waiting for our clunc/custc to correct as well (99lunc/1ustc) we are drifting 6% from cex price and 1% from onchain

A place for us to monitor and collect data for the purposes of future Liquidity discussions 09/09/26 - SpaceRaider - ustc got a massive sell-off on astroport which made ustc price drift 11% before partialy correcting itself. (onchain :100lunc/1ustc on centralized exchanges 105lunc/1ustc ,5%), so now we are waiting for our clunc/custc to correct as well (99lunc/1ustc) we are drifting 6% from cex price and 1% from onchain

LVS commented

2026-09-09 09:06:50 +00:00

Author

Executive Summary

The LUNC/USTC exchange relationship underwent a fundamental structural break during the Terra collapse in May 2022.

Prior to the collapse, Terra's LUNA traded at tens of dollars while UST remained close to its intended $1 peg. Consequently, the number of LUNA required to acquire one UST was very small. During May 2022, however, the UST peg failed and the LUNA supply entered a hyperinflationary death spiral. The ratio consequently moved by several orders of magnitude.

Following the collapse, LUNA became LUNC and UST became USTC. The relationship then stabilised at a completely different level, generally around 140–240 LUNC per USTC, although individual DEX pools have periodically traded outside this range because of low liquidity and pool imbalance.

The quarterly CEX-implied series shows three broad phases:

2022 collapse: extreme dislocation, with the ratio reaching several hundred LUNC/UST.
2023–2025: a relatively stable post-collapse regime, generally around 150–240 LUNC/USTC.
2026: significant compression in the ratio, reaching approximately 91 LUNC/USTC at the end of Q2 before moving back toward approximately 100 LUNC/USTC in Q3.

The August 2026 increase in the Terra Classic on-chain tax from 0.5% to 1.5% is an important new variable. However, the available post-change price data are not sufficient to conclude that the tax increase itself caused a change in the LUNC/USTC ratio.

1. Definition of the ratio
For consistency, the analysis defines the ratio as:

LUNC/USTC = USTC price / LUNC price

For example, if:

USTC = $0.0055
LUNC = $0.000055
then:

$0.0055 / $0.000055 = 100 LUNC per USTC

The ratio therefore increases when USTC appreciates relative to LUNC and decreases when LUNC appreciates relative to USTC.

For CEX analysis, this is an implied ratio derived from USD market prices. It is not necessarily the price at which a trader could execute a large LUNC/USTC swap.

This distinction becomes especially important for DEXs.

2. The May 2022 structural break
The starting point for a post-crash analysis should technically be May 2022 rather than 2021.

In 2021, UST was still broadly maintaining its dollar peg, while LUNA appreciated dramatically. CoinLore records an average LUNA price of approximately $28.70 for 2021, with a year-end price of $85.48. UST, meanwhile, remained around $1.

The collapse occurred in May 2022.

LUNA reached approximately $119 in April 2022 before collapsing. CoinLore records a 2022 low of approximately $0.0000332. UST fell from approximately $1 to a few cents.

The consequence for the ratio was extraordinary.

At the end of June 2022, for example:
LUNA/LUNC ≈ $0.000112
UST ≈ $0.0702
implied ratio ≈ 627 LUNC per UST

By the end of September:
LUNC ≈ $0.000207
UST ≈ $0.0310
implied ratio ≈ 150 LUNC per UST

By the end of December:
LUNC ≈ $0.000144
UST ≈ $0.0202
implied ratio ≈ 140 LUNC per UST

The rapid decline from approximately 627 to approximately 140 demonstrates how unstable the relative valuation was immediately after the collapse.

3. Quarterly CEX-implied ratio
The following series uses quarter-end closing prices. It provides a more useful view of the evolution of the ratio than annual averages because it captures the large changes that occurred within individual years.

Period LUNC close UST/USTC close Implied LUNC/USTC
Jun 2022 $0.000112 $0.0702 627
Sep 2022 $0.000207 $0.0310 150
Dec 2022 $0.000144 $0.0202 140
Mar 2023 $0.000124 $0.0218 176
Jun 2023 $0.000088 $0.0126 143
Sep 2023 $0.0000634 $0.0124 196
Dec 2023 $0.000138 $0.0332 241
Mar 2024 $0.000159 $0.0288 182
Jun 2024 $0.0000823 $0.0180 219
Sep 2024 $0.0000916 $0.0207 226
Dec 2024 $0.000108 $0.0195 181
Mar 2025 $0.0000595 $0.0115 193
Jun 2025 $0.0000558 $0.0125 224
Sep 2025 $0.0000536 $0.0110 205
Dec 2025 $0.0000421 $0.00642 153
Mar 2026 $0.0000372 $0.00447 120
Jun 2026 $0.0000599 $0.00544 91
Aug 2026* $0.0000509 $0.00521 102

*August is used instead of Q3 because September is incomplete as of this analysis.

The underlying monthly price series are published by CoinLore and show the quarter-end closes used in these calculations.

4. Quarterly ratio graph
LUNC per USTC — quarterly CEX-implied ratio
Quarter-end ratio calculated as USTC USD close divided by LUNC USD close. The June 2022 observation captures the extreme post-collapse dislocation.

See Picture 4. Graph

The graph highlights the key point: the extreme 2022 ratio was not sustained. After the initial collapse, the market moved into a much narrower relative-price regime.

5. Six-month interpretation
Grouping the quarters into six-month periods makes the longer-term trend easier to identify.

Period Approximate ratio range Interpretation
H2 2022 140–627 Extreme post-collapse normalisation
H1 2023 143–176 Relative stabilisation
H2 2023 196–241 USTC outperformance / ratio expansion
H1 2024 182–219 Elevated but relatively stable
H2 2024 181–226 Broad sideways range
H1 2025 193–224 Ratio remains near ~200
H2 2025 153–205 Material compression
H1 2026 91–120 Strongest ratio compression since collapse
Jul–Aug 2026 ~102 Partial recovery in ratio

The dominant post-collapse range from 2023 through much of 2025 was approximately 150–225 LUNC per USTC, with the ratio spending substantial time around 180–210.

The major exception was late 2023, when USTC appreciated sharply. CoinLore records USTC reaching approximately $0.0771 in November 2023, producing a pronounced upward move in the relative valuation.

6. Maximum, minimum and average observations
There are several ways to define the maximum and minimum, so they should not be confused.

Maximum quarterly ratio
The largest quarter-end observation in the post-collapse dataset is approximately:

627 LUNC/UST at June 2022

This was still the immediate aftermath of the collapse and should be considered a crisis-period observation rather than a representative equilibrium.

Minimum quarterly ratio
The lowest quarter-end observation is approximately:

91 LUNC/USTC at June 2026

This represents a major compression relative to the approximately 180–225 range that dominated 2023–25.

Post-collapse central tendency
For 2023–2025, the quarterly observations generally cluster around approximately 190–200 LUNC/USTC.

The important distinction is that the arithmetic mean is heavily influenced by the extreme June 2022 observation. Therefore, the median and the normal trading range are more informative than a full-period arithmetic average.

A reasonable description of the post-collapse equilibrium through 2023–25 is:

approximately 180–210 LUNC per USTC, with excursions toward 140–240.

7. DEX versus CEX
The CEX-implied ratio is useful for measuring the broad relative valuation of LUNC and USTC, but it should not be confused with the actual exchange rate available in a Terra Classic DEX pool.

DEX prices are determined by the pool's inventory.

If a pool contains too much LUNC relative to USTC, its quoted LUNC/USTC price can differ substantially from the broader market. A trader attempting a large swap can also move the pool price substantially through price impact.

This is particularly important for Terra Classic because some LUNC/USTC pools are extremely small.

For example, a Terraswap LUNC/USTC pool recently reported approximately $18,300 of liquidity and only about $379 of 24-hour volume.

Consequently, a DEX quote should be interpreted as:

"the current marginal pool price"

rather than:

"the market-wide value of one USTC in LUNC."

This distinction explains why DEX/CEX discrepancies can persist without necessarily representing a risk-free arbitrage opportunity.

8. Recent DEX/CEX divergence
The difference is particularly visible in the current market.

A Terraswap LUNC/USTC pool recently quoted LUNC around $0.0000706, with approximately $18.3k of pool liquidity.

By comparison, the aggregated CEX market around the same period had LUNC around $0.000053–$0.000054 and USTC around $0.0055.

That produces approximately:

CEX-implied ratio ≈ 100 LUNC/USTC

versus a pool-implied ratio of roughly:

~79 LUNC/USTC

The DEX/CEX difference is therefore on the order of 20–25%.

However, the tiny DEX liquidity means that this should not be interpreted as a $1-for-$1 arbitrage opportunity. A sufficiently large trade would change the pool price materially.

There are also other Terra Classic pools. For example, an Astroport LUNC/USTC pool has recently shown liquidity of approximately $61k, but its own interface warns that the legacy Astroport pools may not have been migrated after the chain upgrade and may not work as expected.

9. The August 2026 tax change
On 2 August 2026, Terra Classic increased the on-chain tax from:
0.5% → 1.5%

The allocation remained:
1.20% burn
0.15% Community Pool
0.15% Oracle Pool

The change therefore tripled the nominal tax and tripled the burn component from approximately 0.4% to 1.2% of taxable transaction value. The purpose is primarily to accelerate LUNC supply reduction and increase funding for the ecosystem. However, a higher tax also creates an economic cost for on-chain activity.

The important question is therefore not simply:

"Does 1.5% burn more LUNC?"

It obviously does when volume remains constant.

The more useful question is:

"Does the additional burn outweigh the reduction in taxable activity caused by the higher tax?"

The first month of data provides an unusually useful answer.

10. Actual taxable volume since the 1.5% change
Chain-derived data through early September show approximately:
236.43 billion LUNC of taxable on-chain volume since 2 August.

At the reference LUNC price used by the tracker, this represents approximately:
$11.77 million of taxable on-chain activity.

The resulting 1.5% tax has generated approximately:
3.55 billion LUNC of tax or approximately: $176,615 of tax value.

Of that amount:
2.84 billion LUNC or approximately: $141,292 has gone to the burn.

The remainder is divided between the Community Pool and Oracle Pool.

The tracker reports approximately 354.6 million LUNC for each of those 0.15% allocations.

Source - Leonardo LUNC data

11. What happened to volume?
The increase from 0.5% to 1.5% has clearly affected on-chain activity.

The available 36-full-day measurement indicates approximately:
~49% taxable volume relative to the pre-tax benchmark.

This is economically intuitive: increasing the transaction tax makes on-chain movement more expensive. However, the decline has not been large enough to eliminate the benefit of the higher tax rate.

The system is therefore currently operating in the favourable zone:
Volume decline < 66.7%

which means:
Tax revenue/burn at 1.5% > tax revenue/burn at 0.5% baseline

The danger would be a sustained volume decline beyond approximately 67%.

12. Daily activity after the tax change
The chain data also show considerable volatility rather than a smooth decline.

Examples include:

2 August: approximately 4.61B LUNC burn-implied taxable volume
3 August: approximately 9.17B
5 August: approximately 13.67B
6 August: approximately 10.76B
17 August: approximately 12.63B
20 August: approximately 13.42B
24 August: approximately 10.21B
26 August: approximately 9.30B
2 September: approximately 8.14B
7 September: approximately 7.85B
There are therefore still days in which taxable activity approaches or exceeds the pre-tax daily median.

The effect is not a complete abandonment of on-chain activity; rather, it is a reduction in the typical volume level combined with substantial day-to-day variation.

13. Relationship to the LUNC/USTC ratio
The timing is particularly interesting.

The LUNC/USTC ratio had already fallen from:
153 in December 2025
to:
120 in March 2026

and then:
91 in June 2026
before the 1.5% tax was introduced.

Following the tax implementation, the ratio subsequently moved back toward approximately:
102 in August 2026.

Therefore, the data do not support the conclusion that the 1.5% tax caused the 2026 decline in the ratio.

Most of the decline happened before implementation.

Instead, the appropriate interpretation is:
The ratio had already undergone a major relative repricing in H1 2026; the 1.5% tax now introduces an additional supply-reduction mechanism whose effect on the ratio will need to be measured over subsequent quarters.

14. CEX versus DEX implications
This makes the distinction between the two markets increasingly important.

CEX

CEX markets remain the better indicator of the broad LUNC/USTC relative valuation.

They are less directly affected by the Terra Classic on-chain tax because trades occur within the exchange's internal ledger.

DEX

DEX trades interact directly with the Terra Classic chain and therefore face the 1.5% tax.

This raises the effective cost of every on-chain trade.

A trader attempting to exploit a 2% DEX/CEX discrepancy, for example, no longer has anything close to a 2% gross arbitrage opportunity once the 1.5% tax, DEX fees and price impact are included.

This may make thin DEX pools increasingly prone to persistent pricing differences.

15. Overall trend
The complete history can therefore be divided into four regimes.

Regime 1 — May–December 2022: collapse

The ratio moved from less than one LUNA per UST to hundreds of LUNC per UST.

The June 2022 quarter-end observation of approximately 627 represents the extreme crisis period.

Regime 2 — 2023–2024: post-collapse equilibrium

The ratio settled broadly into the:

~140–240 LUNC/USTC range.

The market was effectively finding a new relative valuation for two tokens whose original monetary architecture had failed.

Regime 3 — 2025: gradual compression

The ratio remained around 200 for much of the year before declining toward approximately 153 by December. This marked the beginning of a new relative trend.

Regime 4 — 2026: major compression and new tax regime

The ratio fell:

153 → 120 → 91

between December 2025 and June 2026.

The 1.5% tax then came into effect on 2 August.

Early chain data show:

taxable volume down approximately 49% versus the pre-tax benchmark;
tax collected approximately 3.55B LUNC;
approximately 2.84B LUNC burned;
approximately $176.6k tax collected;
approximately $141.3k burned;
approximately 1.10B additional LUNC burned versus the estimated 0.5% baseline;
and approximately 63% more tax collected than the 0.5% counterfactual.

These figures come from chain-derived measurements that explicitly remove known non-tax burns and normalise the pre- and post-tax periods.

Leonardo LUNC

22. Conclusion
The LUNC/USTC ratio has undergone a fundamental transformation since the Terra collapse.

The extreme 2022 ratio of approximately 627 LUNC/UST fell rapidly and subsequently stabilised around a broad 150–225 range.

For much of 2023–25, the market's central tendency was approximately 180–200 LUNC per USTC.

The major change occurred in 2026, with the ratio falling to approximately 91 in June, its lowest quarter-end observation in the post-collapse dataset.

The August 2026 1.5% tax change is therefore arriving after a major relative repricing has already taken place.

The first month of data provides an encouraging result for the burn mechanism.

Although the higher tax has reduced taxable on-chain volume by approximately 49%, the rate itself has tripled. The measured activity therefore remains comfortably above the approximately −66.7% volume decline required to make the new tax collect less than the old 0.5% regime.

The current outcome is consequently:

lower on-chain volume + substantially higher tax per transaction = higher absolute LUNC burn

The reported figures of approximately 3.55 billion LUNC collected and 2.84 billion LUNC burned since 2 August are significant at the margin, with approximately 1.10 billion additional LUNC burned relative to the estimated 0.5% baseline.

However, the key question is now whether this remains true over several quarters.

For the LUNC/USTC ratio, the most important future test is whether the additional supply reduction results in sustained LUNC outperformance relative to USTC.

For the tax mechanism, the critical threshold is approximately:

~66.7% taxable-volume decline

If activity remains above that level, the 1.5% tax should continue to outperform the old 0.5% rate in absolute tax collection and burn.

If volume eventually falls below that threshold for a sustained period, the economic advantage of the higher tax rate disappears.

Accordingly, the next six to twelve months should be analysed using four linked metrics:

LUNC/USTC CEX ratio
LUNC/USTC DEX/CEX spread
Taxable on-chain volume versus the 11.77B LUNC/day pre-tax benchmark
Cumulative LUNC burned under the 1.5% regime versus the 0.5% counterfactual

Taken together, these metrics will provide a much better indication of whether the 1.5% tax is merely increasing burn mechanically or is beginning to create a meaningful change in LUNC's relative market valuation.

### Executive Summary The LUNC/USTC exchange relationship underwent a fundamental structural break during the Terra collapse in May 2022. Prior to the collapse, Terra's LUNA traded at tens of dollars while UST remained close to its intended $1 peg. Consequently, the number of LUNA required to acquire one UST was very small. During May 2022, however, the UST peg failed and the LUNA supply entered a hyperinflationary death spiral. The ratio consequently moved by several orders of magnitude. Following the collapse, LUNA became LUNC and UST became USTC. The relationship then stabilised at a completely different level, generally around 140–240 LUNC per USTC, although individual DEX pools have periodically traded outside this range because of low liquidity and pool imbalance. The quarterly CEX-implied series shows three broad phases: 1. 2022 collapse: extreme dislocation, with the ratio reaching several hundred LUNC/UST. 2. 2023–2025: a relatively stable post-collapse regime, generally around 150–240 LUNC/USTC. 3. 2026: significant compression in the ratio, reaching approximately 91 LUNC/USTC at the end of Q2 before moving back toward approximately 100 LUNC/USTC in Q3. The August 2026 increase in the Terra Classic on-chain tax from 0.5% to 1.5% is an important new variable. However, the available post-change price data are not sufficient to conclude that the tax increase itself caused a change in the LUNC/USTC ratio. **1. Definition of the ratio** For consistency, the analysis defines the ratio as: LUNC/USTC = USTC price / LUNC price For example, if: USTC = $0.0055 LUNC = $0.000055 then: $0.0055 / $0.000055 = 100 LUNC per USTC The ratio therefore increases when USTC appreciates relative to LUNC and decreases when LUNC appreciates relative to USTC. For CEX analysis, this is an implied ratio derived from USD market prices. It is not necessarily the price at which a trader could execute a large LUNC/USTC swap. This distinction becomes especially important for DEXs. **2. The May 2022 structural break** The starting point for a post-crash analysis should technically be May 2022 rather than 2021. In 2021, UST was still broadly maintaining its dollar peg, while LUNA appreciated dramatically. CoinLore records an average LUNA price of approximately $28.70 for 2021, with a year-end price of $85.48. UST, meanwhile, remained around $1. The collapse occurred in May 2022. LUNA reached approximately $119 in April 2022 before collapsing. CoinLore records a 2022 low of approximately $0.0000332. UST fell from approximately $1 to a few cents. The consequence for the ratio was extraordinary. At the end of June 2022, for example: LUNA/LUNC ≈ $0.000112 UST ≈ $0.0702 implied ratio ≈ 627 LUNC per UST By the end of September: LUNC ≈ $0.000207 UST ≈ $0.0310 implied ratio ≈ 150 LUNC per UST By the end of December: LUNC ≈ $0.000144 UST ≈ $0.0202 implied ratio ≈ 140 LUNC per UST The rapid decline from approximately 627 to approximately 140 demonstrates how unstable the relative valuation was immediately after the collapse. **3. Quarterly CEX-implied ratio** The following series uses quarter-end closing prices. It provides a more useful view of the evolution of the ratio than annual averages because it captures the large changes that occurred within individual years. Period LUNC close UST/USTC close Implied LUNC/USTC Jun 2022 $0.000112 $0.0702 627 Sep 2022 $0.000207 $0.0310 150 Dec 2022 $0.000144 $0.0202 140 Mar 2023 $0.000124 $0.0218 176 Jun 2023 $0.000088 $0.0126 143 Sep 2023 $0.0000634 $0.0124 196 Dec 2023 $0.000138 $0.0332 241 Mar 2024 $0.000159 $0.0288 182 Jun 2024 $0.0000823 $0.0180 219 Sep 2024 $0.0000916 $0.0207 226 Dec 2024 $0.000108 $0.0195 181 Mar 2025 $0.0000595 $0.0115 193 Jun 2025 $0.0000558 $0.0125 224 Sep 2025 $0.0000536 $0.0110 205 Dec 2025 $0.0000421 $0.00642 153 Mar 2026 $0.0000372 $0.00447 120 Jun 2026 $0.0000599 $0.00544 91 Aug 2026* $0.0000509 $0.00521 102 *August is used instead of Q3 because September is incomplete as of this analysis. The underlying monthly price series are published by CoinLore and show the quarter-end closes used in these calculations. **4. Quarterly ratio graph** LUNC per USTC — quarterly CEX-implied ratio Quarter-end ratio calculated as USTC USD close divided by LUNC USD close. The June 2022 observation captures the extreme post-collapse dislocation. See Picture 4. Graph The graph highlights the key point: the extreme 2022 ratio was not sustained. After the initial collapse, the market moved into a much narrower relative-price regime. **5. Six-month interpretation** Grouping the quarters into six-month periods makes the longer-term trend easier to identify. Period Approximate ratio range Interpretation H2 2022 140–627 Extreme post-collapse normalisation H1 2023 143–176 Relative stabilisation H2 2023 196–241 USTC outperformance / ratio expansion H1 2024 182–219 Elevated but relatively stable H2 2024 181–226 Broad sideways range H1 2025 193–224 Ratio remains near ~200 H2 2025 153–205 Material compression H1 2026 91–120 Strongest ratio compression since collapse Jul–Aug 2026 ~102 Partial recovery in ratio The dominant post-collapse range from 2023 through much of 2025 was approximately 150–225 LUNC per USTC, with the ratio spending substantial time around 180–210. The major exception was late 2023, when USTC appreciated sharply. CoinLore records USTC reaching approximately $0.0771 in November 2023, producing a pronounced upward move in the relative valuation. **6. Maximum, minimum and average observations** There are several ways to define the maximum and minimum, so they should not be confused. _Maximum quarterly ratio_ The largest quarter-end observation in the post-collapse dataset is approximately: 627 LUNC/UST at June 2022 This was still the immediate aftermath of the collapse and should be considered a crisis-period observation rather than a representative equilibrium. _Minimum quarterly ratio_ The lowest quarter-end observation is approximately: 91 LUNC/USTC at June 2026 This represents a major compression relative to the approximately 180–225 range that dominated 2023–25. _Post-collapse central tendency_ For 2023–2025, the quarterly observations generally cluster around approximately 190–200 LUNC/USTC. The important distinction is that the arithmetic mean is heavily influenced by the extreme June 2022 observation. Therefore, the median and the normal trading range are more informative than a full-period arithmetic average. A reasonable description of the post-collapse equilibrium through 2023–25 is: approximately 180–210 LUNC per USTC, with excursions toward 140–240. **7. DEX versus CEX** The CEX-implied ratio is useful for measuring the broad relative valuation of LUNC and USTC, but it should not be confused with the actual exchange rate available in a Terra Classic DEX pool. DEX prices are determined by the pool's inventory. If a pool contains too much LUNC relative to USTC, its quoted LUNC/USTC price can differ substantially from the broader market. A trader attempting a large swap can also move the pool price substantially through price impact. This is particularly important for Terra Classic because some LUNC/USTC pools are extremely small. For example, a Terraswap LUNC/USTC pool recently reported approximately $18,300 of liquidity and only about $379 of 24-hour volume. Consequently, a DEX quote should be interpreted as: "the current marginal pool price" rather than: "the market-wide value of one USTC in LUNC." This distinction explains why DEX/CEX discrepancies can persist without necessarily representing a risk-free arbitrage opportunity. **8. Recent DEX/CEX divergence** The difference is particularly visible in the current market. A Terraswap LUNC/USTC pool recently quoted LUNC around $0.0000706, with approximately $18.3k of pool liquidity. By comparison, the aggregated CEX market around the same period had LUNC around $0.000053–$0.000054 and USTC around $0.0055. That produces approximately: CEX-implied ratio ≈ 100 LUNC/USTC versus a pool-implied ratio of roughly: ~79 LUNC/USTC The DEX/CEX difference is therefore on the order of 20–25%. However, the tiny DEX liquidity means that this should not be interpreted as a $1-for-$1 arbitrage opportunity. A sufficiently large trade would change the pool price materially. There are also other Terra Classic pools. For example, an Astroport LUNC/USTC pool has recently shown liquidity of approximately $61k, but its own interface warns that the legacy Astroport pools may not have been migrated after the chain upgrade and may not work as expected. **9. The August 2026 tax change** On 2 August 2026, Terra Classic increased the on-chain tax from: 0.5% → 1.5% The allocation remained: 1.20% burn 0.15% Community Pool 0.15% Oracle Pool The change therefore tripled the nominal tax and tripled the burn component from approximately 0.4% to 1.2% of taxable transaction value. The purpose is primarily to accelerate LUNC supply reduction and increase funding for the ecosystem. However, a higher tax also creates an economic cost for on-chain activity. The important question is therefore not simply: "Does 1.5% burn more LUNC?" It obviously does when volume remains constant. The more useful question is: "Does the additional burn outweigh the reduction in taxable activity caused by the higher tax?" The first month of data provides an unusually useful answer. **10. Actual taxable volume since the 1.5% change** Chain-derived data through early September show approximately: 236.43 billion LUNC of taxable on-chain volume since 2 August. At the reference LUNC price used by the tracker, this represents approximately: $11.77 million of taxable on-chain activity. The resulting 1.5% tax has generated approximately: 3.55 billion LUNC of tax or approximately: $176,615 of tax value. Of that amount: 2.84 billion LUNC or approximately: $141,292 has gone to the burn. The remainder is divided between the Community Pool and Oracle Pool. The tracker reports approximately 354.6 million LUNC for each of those 0.15% allocations. Source - Leonardo LUNC data **11. What happened to volume?** The increase from 0.5% to 1.5% has clearly affected on-chain activity. The available 36-full-day measurement indicates approximately: ~49% taxable volume relative to the pre-tax benchmark. This is economically intuitive: increasing the transaction tax makes on-chain movement more expensive. However, the decline has not been large enough to eliminate the benefit of the higher tax rate. The system is therefore currently operating in the favourable zone: Volume decline < 66.7% which means: Tax revenue/burn at 1.5% > tax revenue/burn at 0.5% baseline The danger would be a sustained volume decline beyond approximately 67%. **12. Daily activity after the tax change** The chain data also show considerable volatility rather than a smooth decline. Examples include: - 2 August: approximately 4.61B LUNC burn-implied taxable volume - 3 August: approximately 9.17B - 5 August: approximately 13.67B - 6 August: approximately 10.76B - 17 August: approximately 12.63B - 20 August: approximately 13.42B - 24 August: approximately 10.21B - 26 August: approximately 9.30B - 2 September: approximately 8.14B - 7 September: approximately 7.85B There are therefore still days in which taxable activity approaches or exceeds the pre-tax daily median. The effect is not a complete abandonment of on-chain activity; rather, it is a reduction in the typical volume level combined with substantial day-to-day variation. **13. Relationship to the LUNC/USTC ratio** The timing is particularly interesting. The LUNC/USTC ratio had already fallen from: 153 in December 2025 to: 120 in March 2026 and then: 91 in June 2026 before the 1.5% tax was introduced. Following the tax implementation, the ratio subsequently moved back toward approximately: 102 in August 2026. Therefore, the data do not support the conclusion that the 1.5% tax caused the 2026 decline in the ratio. Most of the decline happened before implementation. Instead, the appropriate interpretation is: The ratio had already undergone a major relative repricing in H1 2026; the 1.5% tax now introduces an additional supply-reduction mechanism whose effect on the ratio will need to be measured over subsequent quarters. **14. CEX versus DEX implications** This makes the distinction between the two markets increasingly important. ### CEX CEX markets remain the better indicator of the broad LUNC/USTC relative valuation. They are less directly affected by the Terra Classic on-chain tax because trades occur within the exchange's internal ledger. ### DEX DEX trades interact directly with the Terra Classic chain and therefore face the 1.5% tax. This raises the effective cost of every on-chain trade. A trader attempting to exploit a 2% DEX/CEX discrepancy, for example, no longer has anything close to a 2% gross arbitrage opportunity once the 1.5% tax, DEX fees and price impact are included. This may make thin DEX pools increasingly prone to persistent pricing differences. **15. Overall trend** The complete history can therefore be divided into four regimes. ### Regime 1 — May–December 2022: collapse The ratio moved from less than one LUNA per UST to hundreds of LUNC per UST. The June 2022 quarter-end observation of approximately 627 represents the extreme crisis period. ### Regime 2 — 2023–2024: post-collapse equilibrium The ratio settled broadly into the: ~140–240 LUNC/USTC range. The market was effectively finding a new relative valuation for two tokens whose original monetary architecture had failed. ### Regime 3 — 2025: gradual compression The ratio remained around 200 for much of the year before declining toward approximately 153 by December. This marked the beginning of a new relative trend. ### Regime 4 — 2026: major compression and new tax regime The ratio fell: 153 → 120 → 91 between December 2025 and June 2026. The 1.5% tax then came into effect on 2 August. Early chain data show: - taxable volume down approximately 49% versus the pre-tax benchmark; - tax collected approximately 3.55B LUNC; - approximately 2.84B LUNC burned; - approximately $176.6k tax collected; - approximately $141.3k burned; - approximately 1.10B additional LUNC burned versus the estimated 0.5% baseline; and approximately 63% more tax collected than the 0.5% counterfactual. These figures come from chain-derived measurements that explicitly remove known non-tax burns and normalise the pre- and post-tax periods. - Leonardo LUNC **22. Conclusion** The LUNC/USTC ratio has undergone a fundamental transformation since the Terra collapse. The extreme 2022 ratio of approximately 627 LUNC/UST fell rapidly and subsequently stabilised around a broad 150–225 range. For much of 2023–25, the market's central tendency was approximately 180–200 LUNC per USTC. The major change occurred in 2026, with the ratio falling to approximately 91 in June, its lowest quarter-end observation in the post-collapse dataset. The August 2026 1.5% tax change is therefore arriving after a major relative repricing has already taken place. The first month of data provides an encouraging result for the burn mechanism. Although the higher tax has reduced taxable on-chain volume by approximately 49%, the rate itself has tripled. The measured activity therefore remains comfortably above the approximately −66.7% volume decline required to make the new tax collect less than the old 0.5% regime. The current outcome is consequently: lower on-chain volume + substantially higher tax per transaction = higher absolute LUNC burn The reported figures of approximately 3.55 billion LUNC collected and 2.84 billion LUNC burned since 2 August are significant at the margin, with approximately 1.10 billion additional LUNC burned relative to the estimated 0.5% baseline. However, the key question is now whether this remains true over several quarters. For the LUNC/USTC ratio, the most important future test is whether the additional supply reduction results in sustained LUNC outperformance relative to USTC. For the tax mechanism, the critical threshold is approximately: ~66.7% taxable-volume decline If activity remains above that level, the 1.5% tax should continue to outperform the old 0.5% rate in absolute tax collection and burn. If volume eventually falls below that threshold for a sustained period, the economic advantage of the higher tax rate disappears. Accordingly, the next six to twelve months should be analysed using four linked metrics: - LUNC/USTC CEX ratio - LUNC/USTC DEX/CEX spread - Taxable on-chain volume versus the 11.77B LUNC/day pre-tax benchmark - Cumulative LUNC burned under the 1.5% regime versus the 0.5% counterfactual Taken together, these metrics will provide a much better indication of whether the 1.5% tax is merely increasing burn mechanically or is beginning to create a meaningful change in LUNC's relative market valuation.

4. Graph.png

36 KiB

LVS commented

2026-09-09 10:05:22 +00:00

Author

LUNC/USTC Post-Crash CEX–DEX Divergence Analysis
Analysis focus: Post-May 2022 relative valuation, CEX/DEX divergence, liquidity, arbitrage friction, and the impact of the August 2026 Terra Classic tax increase.

Executive Summary
The post-May 2022 LUNC/USTC market is better understood not simply as a change in the LUNC/USTC ratio, but as a transition from a relatively integrated market into a fragmented market with materially different CEX and DEX price-discovery mechanisms.

The May 2022 Terra collapse created the first structural break.

The subsequent years created a second, less obvious structural break:
The emergence of potentially persistent differences between centralized-exchange and decentralized-exchange valuations.

Centralized exchanges provide the deeper and more liquid USD price-discovery environment.

Terra Classic DEX pools, by comparison, can be extremely small. Their prices are determined by pool inventory and automated-market-maker mechanics rather than by a centralized order book.

This means a DEX can quote a materially different LUNC/USTC ratio from the broader CEX market without that difference necessarily representing a risk-free arbitrage opportunity.

The key metrics are therefore:

CEX-implied LUNC/USTC ratio
DEX-implied LUNC/USTC ratio
DEX/CEX divergence
DEX liquidity and volume
Effective arbitrage cost
Taxable on-chain volume
LUNC burned
The current example is particularly significant.

Using approximately:
CEX LUNC price: $0.0000535
CEX USTC price: $0.00555
Terraswap LUNC price: $0.0000706

the approximate ratios are:

Market LUNC/USTC
CEX ~104
Terraswap DEX ~79
Difference ~25 LUNC

The resulting DEX/CEX divergence is approximately:
DEX/CEX divergence = (79 / 104) - 1
≈ ~24%

In other words:
The DEX ratio is approximately 24% below the CEX ratio. Expressed using the DEX as the denominator, the CEX ratio is approximately 32% higher.

This is a large difference, but it should not automatically be interpreted as a 24% arbitrage opportunity.

The DEX price is affected by:

pool depth
inventory imbalance
swap fees
the 1.5% Terra Classic transaction tax
price impact
slippage
CEX fees
transfer costs
execution risk

1. Ratio Definition
The CEX-implied ratio is:

RCex=PUSTC,Cex/PLUNC,Cex

For example:

USTC = $0.0055
LUNC = $0.000055

Therefore:

0.0055 / 0.000055 = 100

or:

100 LUNC per USTC

The ratio increases when USTC appreciates relative to LUNC.

The ratio decreases when LUNC appreciates relative to USTC.

2. DEX Ratio
The same calculation can be applied to a DEX pool:

RDex=PUSTC,Dex/PLUNC,Dex

The important difference is that the DEX prices are generated by the pool.

For an AMM:

x×y=k

where:

x = LUNC reserves
y = USTC reserves
k = pool invariant
The marginal price therefore depends on the relative inventory of the two tokens.

A thin pool can consequently produce a price that is significantly different from the broader market.

3. DEX/CEX Divergence
The preferred divergence metric is:

D=(RDex/RCex−1)×100

Interpretation:

Divergence Interpretation
0% DEX and CEX agree
-5% DEX ratio 5% below CEX
-10% DEX ratio 10% below CEX
-20% DEX ratio 20% below CEX
+10% DEX ratio 10% above CEX
+25% DEX ratio 25% above CEX

For example:

CEX = 100
DEX = 79

79 / 100 - 1
= -21%

Therefore:

The DEX is 21% below the CEX benchmark.

If the denominator is reversed:
100 / 79 - 1
= +26.6%

the CEX is 26.6% above the DEX.

Both calculations describe the same underlying difference, but they answer slightly different questions.

For this analysis, DEX/CEX divergence is the preferred metric.

4. The May 2022 Structural Break
Before the Terra collapse, LUNA and UST were part of a much more integrated monetary system. The collapse fundamentally changed the relationship. The CEX-implied ratio subsequently moved through several orders of magnitude.

Quarter-end CEX-implied ratio

Period LUNC/USTC

Jun 2022 627
Sep 2022 150
Dec 2022 140
Mar 2023 176
Jun 2023 143
Sep 2023 196
Dec 2023 241
Mar 2024 182
Jun 2024 219
Sep 2024 226
Dec 2024 181
Mar 2025 193
Jun 2025 224
Sep 2025 205
Dec 2025 153
Mar 2026 120
Jun 2026 91
Aug 2026 ~ 102

The June 2022 value of approximately 627 LUNC/UST represents the extreme post-collapse dislocation. It should not be treated as a normal equilibrium, rather treat it as an outlier and use 241 from Dec 2023 as the top of the range.

5. Post-Collapse CEX Regimes
The CEX series can be divided into four major regimes.

Regime 1 — May–December 2022

Systemic collapse
The ratio moved from less than one LUNA per UST to hundreds of LUNC per UST.

The June 2022 observation:
627 LUNC/UST was an extreme crisis-period observation.

Regime 2 — 2023–2024

Post-collapse equilibrium
The ratio broadly settled into:
~140–240 LUNC/USTC

A substantial amount of the period was spent around:

~180–210 LUNC/USTC

This represented the new relative valuation regime following the collapse.

Regime 3 — 2025

Beginning of compression
The ratio remained relatively elevated during the first half of the year before falling substantially:

224 → 205 → 153 between June, September and December.

This marked the beginning of a new relative trend.

Regime 4 — 2026

Major relative compression
The ratio moved:

153 → 120 → 91 between December 2025 and June 2026.

The total compression was:

91/153−1≈−40.5%

Therefore:
The CEX-implied LUNC/USTC ratio compressed by approximately 41% in six months.
The August ratio then recovered toward approximately: 102 representing an approximately 12% rebound from the June low.

6. CEX Ratio Graph
xychart-beta
title "LUNC/USTC CEX-Implied Ratio"
x-axis ["Jun22","Sep22","Dec22","Mar23","Jun23","Sep23","Dec23","Mar24","Jun24","Sep24","Dec24","Mar25","Jun25","Sep25","Dec25","Mar26","Jun26","Aug26"]
y-axis "LUNC per USTC" 0 --> 650
line [627,150,140,176,143,196,241,182,219,226,181,193,224,205,153,120,91,102]

The graph shows two very different characteristics:

The extreme post-collapse normalization in 2022.
The much narrower relative-price regime that followed.
The more interesting development is the second:

2025 → 2026
224 → 153 → 120 → 91

7. Why the DEX Is Different
A CEX uses an order book.

A DEX AMM uses a liquidity pool.

This distinction is critical.

A CEX can incorporate new information through many independent buyers and sellers.

A DEX pool can remain at an outdated or distorted price until someone trades against it.

Therefore:

CEX price
↓
New market information
↓
Order-book repricing

whereas:

DEX price
↓
Pool inventory
↓
Trader interaction
↓
AMM repricing

The two markets can therefore temporarily diverge.

8. Current DEX Example
A recent Terraswap LUNC/USTC pool snapshot shows approximately:

LUNC price: $0.0000706
Pool liquidity: ~$18.3k
24h volume: ~$379

This is extremely small compared with the broader CEX market.

Using USTC around $0.00555:

RDEX=0.00555/0.0000706

gives approximately:
79 LUNC/USTC

The corresponding CEX ratio is approximately:

104 LUNC/USTC

Therefore:

Market Ratio
CEX ~104
DEX ~79
Absolute difference ~25
DEX/CEX divergence ~-24%

9. Current CEX/DEX Divergence
The calculation is:

D=79/104−1

D≈−24%

Therefore:

Current DEX/CEX divergence ≈ -24%
The DEX is valuing one USTC at approximately 79 LUNC while the CEX market implies approximately 104 LUNC.

Relative-value visualization
CEX benchmark = 100%

CEX 100% |████████████████████████████████████████|
DEX 76% |██████████████████████████████ |

       ← approximately 24% DEX discount →

10. LUNC Price Divergence
The divergence can also be decomposed into the underlying token prices.

Approximate values:

Metric CEX DEX Difference
LUNC ~$0.0000535 ~$0.0000706 ~+32%
USTC ~$0.00555 — —
LUNC/USTC ~104 ~79 ~-24%

The DEX LUNC price is approximately:

0.0000706/0.0000535−1≈32% above the CEX LUNC price.

This suggests that the current DEX/CEX ratio divergence is substantially influenced by LUNC being expensive inside the thin pool relative to the broader CEX market.

11. Why This Is Not Automatically a 24% Arbitrage
This is the most important qualification. A quoted DEX price is a marginal pool price. It is not necessarily the price at which a large trade can execute. The current pool has approximately $18.3k of liquidity.

A trader attempting to exploit the apparent discrepancy can encounter:

DEX swap fees
1.5% Terra Classic tax
price impact
slippage
CEX trading fees
transfer costs
settlement delays
inventory limitations
pool imbalance
Therefore:

Gross Divergence≠Net Arbitrage Profit

and:

Net Arbitrage Profit≠Risk-free Profit

12. Arbitrage Cost Model
A simplified model is:

Net Edge=Gross Divergence−Tax−FDEX−FCEX−Slippage−Transfer Costs

Define:

Tax = Terra Classic transaction tax
F_DEX = DEX swap fee
F_CEX = CEX trading fee
Slippage = execution price impact
Transfer Costs = operational/settlement costs

The minimum divergence required before arbitrage becomes attractive is therefore approximately:

Dmin=Tax+FDEX+FCEX+Slippage+Transfer Costs

13. Effect of the 1.5% Tax
On 2 August 2026, the Terra Classic on-chain tax increased:

0.5% → 1.5%

The tax therefore tripled.

At constant volume:

1.5/0.5=3

So the nominal tax burden is three times higher.This creates two opposing effects.

Positive effect
Higher tax
↓
More LUNC collected
↓
More LUNC burned
↓
Lower circulating supply

Negative market-efficiency effect
Higher tax
↓
More expensive on-chain trading
↓
Lower arbitrage incentive
↓
Less DEX/CEX convergence
↓
Potentially larger persistent price differences

This second effect deserves much more attention than it normally receives.

14. Tax vs Arbitrage
The 1.5% tax itself is not large enough to explain a 24% DEX/CEX ratio divergence.

Current approximate relationship:

Gross DEX/CEX divergence ~24%
████████████████████████

Chain tax 1.5%
██

DEX fee ~variable
▌

CEX fee ~variable
▌

Slippage / price impact variable
█████████

Therefore:

The tax is a contributor to arbitrage friction, but it is not a sufficient explanation for the current divergence.

The remaining difference must be associated with factors such as:

pool inventory
insufficient liquidity
low trading volume
limited arbitrage capital
market fragmentation
and potentially stale pool pricing

15. Taxable Volume After the Tax Increase
The available chain-derived data indicate approximately:

236.43B LUNC of taxable volume since 2 August. At the reference LUNC price, this corresponds to approximately: $11.77M of taxable activity. At a 1.5% tax: ~3.55B LUNC of tax was generated.

Approximately:
~2.84B LUNC
was attributed to the burn.

The remainder was allocated between the Community Pool and Oracle Pool.

16. Volume Reduction
The available 36-full-day comparison indicates approximately:

49% of the pre-tax taxable-volume benchmark

or approximately:

-51% activity

relative to the benchmark.

The important mathematical threshold is:

1.5%×V-new>0.5%×V-old

For the new tax to collect more than the old regime:

V-new>0.5/1.5V-old

Therefore:

V-new>33.3%/V-old

The maximum volume decline before the new regime becomes inferior is approximately:

66.7%

The observed decline is therefore still comfortably inside the favourable range.

17. But Burn Efficiency and Market Efficiency Are Different
This distinction is critical.

The tax can be successful from a supply-reduction perspective while simultaneously making the DEX market less efficient.

Burn objective
Tax revenue ↑
Burn ↑
Supply ↓

Market-efficiency objective
DEX liquidity ↑
Arbitrage ↑
Price convergence ↑
Spread ↓

These objectives are not identical.

A tax that increases burn but discourages arbitrage can produce:

Lower supply
+
Greater DEX/CEX price fragmentation

That is why both metrics need to be monitored.

18. CEX vs DEX: Two Different Markets
The CEX should currently be treated as the primary indicator of broad LUNC/USTC relative valuation.

The DEX should be treated as an indicator of:

on-chain demand,
pool inventory,
marginal executable price,
liquidity conditions,
arbitrage activity,
and market fragmentation.
This produces a useful distinction:

Market Primary information
CEX Broad relative valuation
DEX Marginal on-chain valuation
CEX/DEX spread Market fragmentation
DEX liquidity Ability to absorb arbitrage
DEX volume Actual on-chain trading activity

19. Recommended Primary Chart
The most useful future chart should plot both ratios simultaneously.

xychart-beta
title "LUNC/USTC CEX vs DEX"
x-axis ["Jun 2026","Jul 2026","Aug 2026","Sep 2026"]
y-axis "LUNC per USTC" 0 --> 120
line [91,95,102,104]
line [null,null,79,79]

Note: The DEX observations shown here are current pool snapshots rather than reconstructed historical monthly averages. Historical DEX observations should be generated from archived pool reserves before being treated as a time series.

20. Divergence Chart
The second key graph should display the spread directly.

xychart-beta
title "DEX/CEX LUNC/USTC Divergence"
x-axis ["Jun 2026","Jul 2026","Aug 2026","Sep 2026"]
y-axis "Divergence (%)" -30 --> 10
line [null,null,-24,-24]

The zero line is important.

0% ───────────────────────── CEX = DEX
-5%
-10%
-15%
-20%
-24% ───────────────────────── Current
-25%
-30%

A move toward zero would indicate improving price convergence.

A move further below zero would indicate increasing DEX/CEX fragmentation.

Five-Regime Market Structure
The complete post-crash history is best represented by five regimes.
2022 — Collapse
<1 → 627 → 140

Extreme systemic dislocation.

2023–2024 — Post-collapse equilibrium
~140–240

Broad relative-price stabilization.

2025 — Compression begins
224 → 153

Beginning of a new LUNC-relative trend.

H1 2026 — Major compression
153 → 120 → 91

Approximately 41% compression from December 2025 to June 2026.

H2 2026 — Divergence becomes central
91 → ~102

CEX ratio partially recovers while thin DEX pools can remain materially displaced.

This makes the CEX/DEX spread increasingly important.

**LUNC/USTC Post-Crash CEX–DEX Divergence Analysis** Analysis focus: Post-May 2022 relative valuation, CEX/DEX divergence, liquidity, arbitrage friction, and the impact of the August 2026 Terra Classic tax increase. **Executive Summary** The post-May 2022 LUNC/USTC market is better understood not simply as a change in the LUNC/USTC ratio, but as a transition from a relatively integrated market into a fragmented market with materially different CEX and DEX price-discovery mechanisms. The May 2022 Terra collapse created the first structural break. The subsequent years created a second, less obvious structural break: The emergence of potentially persistent differences between centralized-exchange and decentralized-exchange valuations. Centralized exchanges provide the deeper and more liquid USD price-discovery environment. Terra Classic DEX pools, by comparison, can be extremely small. Their prices are determined by pool inventory and automated-market-maker mechanics rather than by a centralized order book. This means a DEX can quote a materially different LUNC/USTC ratio from the broader CEX market without that difference necessarily representing a risk-free arbitrage opportunity. The key metrics are therefore: - CEX-implied LUNC/USTC ratio - DEX-implied LUNC/USTC ratio - DEX/CEX divergence - DEX liquidity and volume - Effective arbitrage cost - Taxable on-chain volume - LUNC burned The current example is particularly significant. Using approximately: CEX LUNC price: $0.0000535 CEX USTC price: $0.00555 Terraswap LUNC price: $0.0000706 the approximate ratios are: Market LUNC/USTC CEX ~104 Terraswap DEX ~79 Difference ~25 LUNC The resulting DEX/CEX divergence is approximately: DEX/CEX divergence = (79 / 104) - 1 ≈ ~24% In other words: The DEX ratio is approximately 24% below the CEX ratio. Expressed using the DEX as the denominator, the CEX ratio is approximately 32% higher. This is a large difference, but it should not automatically be interpreted as a 24% arbitrage opportunity. The DEX price is affected by: - pool depth - inventory imbalance - swap fees - the 1.5% Terra Classic transaction tax - price impact - slippage - CEX fees - transfer costs - execution risk **1. Ratio Definition** The CEX-implied ratio is: RCex=PUSTC,Cex/PLUNC,Cex For example: USTC = $0.0055 LUNC = $0.000055 Therefore: 0.0055 / 0.000055 = 100 or: 100 LUNC per USTC The ratio increases when USTC appreciates relative to LUNC. The ratio decreases when LUNC appreciates relative to USTC. **2. DEX Ratio** The same calculation can be applied to a DEX pool: RDex=PUSTC,Dex/PLUNC,Dex The important difference is that the DEX prices are generated by the pool. For an AMM: x×y=k where: x = LUNC reserves y = USTC reserves k = pool invariant The marginal price therefore depends on the relative inventory of the two tokens. A thin pool can consequently produce a price that is significantly different from the broader market. **3. DEX/CEX Divergence** The preferred divergence metric is: D=(RDex/RCex−1)×100 Interpretation: Divergence Interpretation 0% DEX and CEX agree -5% DEX ratio 5% below CEX -10% DEX ratio 10% below CEX -20% DEX ratio 20% below CEX +10% DEX ratio 10% above CEX +25% DEX ratio 25% above CEX For example: CEX = 100 DEX = 79 79 / 100 - 1 = -21% Therefore: The DEX is 21% below the CEX benchmark. If the denominator is reversed: 100 / 79 - 1 = +26.6% the CEX is 26.6% above the DEX. Both calculations describe the same underlying difference, but they answer slightly different questions. For this analysis, DEX/CEX divergence is the preferred metric. **4. The May 2022 Structural Break** Before the Terra collapse, LUNA and UST were part of a much more integrated monetary system. The collapse fundamentally changed the relationship. The CEX-implied ratio subsequently moved through several orders of magnitude. ### Quarter-end CEX-implied ratio ### Period LUNC/USTC Jun 2022 627 Sep 2022 150 Dec 2022 140 Mar 2023 176 Jun 2023 143 Sep 2023 196 Dec 2023 241 Mar 2024 182 Jun 2024 219 Sep 2024 226 Dec 2024 181 Mar 2025 193 Jun 2025 224 Sep 2025 205 Dec 2025 153 Mar 2026 120 Jun 2026 91 Aug 2026 ~ 102 The June 2022 value of approximately 627 LUNC/UST represents the extreme post-collapse dislocation. It should not be treated as a normal equilibrium, rather treat it as an outlier and use 241 from Dec 2023 as the top of the range. **5. Post-Collapse CEX Regimes** The CEX series can be divided into four major regimes. ### Regime 1 — May–December 2022 Systemic collapse The ratio moved from less than one LUNA per UST to hundreds of LUNC per UST. The June 2022 observation: 627 LUNC/UST was an extreme crisis-period observation. ### Regime 2 — 2023–2024 Post-collapse equilibrium The ratio broadly settled into: ~140–240 LUNC/USTC A substantial amount of the period was spent around: ~180–210 LUNC/USTC This represented the new relative valuation regime following the collapse. ### Regime 3 — 2025 Beginning of compression The ratio remained relatively elevated during the first half of the year before falling substantially: 224 → 205 → 153 between June, September and December. This marked the beginning of a new relative trend. ### Regime 4 — 2026 Major relative compression The ratio moved: 153 → 120 → 91 between December 2025 and June 2026. The total compression was: 91/153−1≈−40.5% Therefore: The CEX-implied LUNC/USTC ratio compressed by approximately 41% in six months. The August ratio then recovered toward approximately: 102 representing an approximately 12% rebound from the June low. **6. CEX Ratio Graph** xychart-beta title "LUNC/USTC CEX-Implied Ratio" x-axis ["Jun22","Sep22","Dec22","Mar23","Jun23","Sep23","Dec23","Mar24","Jun24","Sep24","Dec24","Mar25","Jun25","Sep25","Dec25","Mar26","Jun26","Aug26"] y-axis "LUNC per USTC" 0 --> 650 line [627,150,140,176,143,196,241,182,219,226,181,193,224,205,153,120,91,102] The graph shows two very different characteristics: The extreme post-collapse normalization in 2022. The much narrower relative-price regime that followed. The more interesting development is the second: 2025 → 2026 224 → 153 → 120 → 91 **7. Why the DEX Is Different** A CEX uses an order book. A DEX AMM uses a liquidity pool. This distinction is critical. A CEX can incorporate new information through many independent buyers and sellers. A DEX pool can remain at an outdated or distorted price until someone trades against it. Therefore: CEX price ↓ New market information ↓ Order-book repricing whereas: DEX price ↓ Pool inventory ↓ Trader interaction ↓ AMM repricing The two markets can therefore temporarily diverge. **8. Current DEX Example** A recent Terraswap LUNC/USTC pool snapshot shows approximately: LUNC price: $0.0000706 Pool liquidity: ~$18.3k 24h volume: ~$379 This is extremely small compared with the broader CEX market. Using USTC around $0.00555: RDEX=0.00555/0.0000706 gives approximately: 79 LUNC/USTC The corresponding CEX ratio is approximately: 104 LUNC/USTC Therefore: Market Ratio CEX ~104 DEX ~79 Absolute difference ~25 DEX/CEX divergence ~-24% **9. Current CEX/DEX Divergence** The calculation is: D=79/104−1 D≈−24% Therefore: Current DEX/CEX divergence ≈ -24% The DEX is valuing one USTC at approximately 79 LUNC while the CEX market implies approximately 104 LUNC. Relative-value visualization CEX benchmark = 100% CEX 100% |████████████████████████████████████████| DEX 76% |██████████████████████████████ | ← approximately 24% DEX discount → **10. LUNC Price Divergence** The divergence can also be decomposed into the underlying token prices. Approximate values: Metric CEX DEX Difference LUNC ~$0.0000535 ~$0.0000706 ~+32% USTC ~$0.00555 — — LUNC/USTC ~104 ~79 ~-24% The DEX LUNC price is approximately: 0.0000706/0.0000535−1≈32% above the CEX LUNC price. This suggests that the current DEX/CEX ratio divergence is substantially influenced by LUNC being expensive inside the thin pool relative to the broader CEX market. **11. Why This Is Not Automatically a 24% Arbitrage** This is the most important qualification. A quoted DEX price is a marginal pool price. It is not necessarily the price at which a large trade can execute. The current pool has approximately $18.3k of liquidity. A trader attempting to exploit the apparent discrepancy can encounter: - DEX swap fees - 1.5% Terra Classic tax - price impact - slippage - CEX trading fees - transfer costs - settlement delays - inventory limitations - pool imbalance Therefore: Gross Divergence≠Net Arbitrage Profit and: Net Arbitrage Profit≠Risk-free Profit **12. Arbitrage Cost Model** A simplified model is: Net Edge=Gross Divergence−Tax−FDEX−FCEX−Slippage−Transfer Costs Define: - Tax = Terra Classic transaction tax - F_DEX = DEX swap fee - F_CEX = CEX trading fee - Slippage = execution price impact - Transfer Costs = operational/settlement costs The minimum divergence required before arbitrage becomes attractive is therefore approximately: Dmin=Tax+FDEX+FCEX+Slippage+Transfer Costs **13. Effect of the 1.5% Tax** On 2 August 2026, the Terra Classic on-chain tax increased: 0.5% → 1.5% The tax therefore tripled. At constant volume: 1.5/0.5=3 So the nominal tax burden is three times higher.This creates two opposing effects. **Positive effect** Higher tax ↓ More LUNC collected ↓ More LUNC burned ↓ Lower circulating supply **Negative market-efficiency effect** Higher tax ↓ More expensive on-chain trading ↓ Lower arbitrage incentive ↓ Less DEX/CEX convergence ↓ Potentially larger persistent price differences This second effect deserves much more attention than it normally receives. **14. Tax vs Arbitrage** The 1.5% tax itself is not large enough to explain a 24% DEX/CEX ratio divergence. Current approximate relationship: Gross DEX/CEX divergence ~24% ████████████████████████ Chain tax 1.5% ██ DEX fee ~variable ▌ CEX fee ~variable ▌ Slippage / price impact variable █████████ Therefore: The tax is a contributor to arbitrage friction, but it is not a sufficient explanation for the current divergence. The remaining difference must be associated with factors such as: - pool inventory - insufficient liquidity - low trading volume - limited arbitrage capital - market fragmentation - and potentially stale pool pricing **15. Taxable Volume After the Tax Increase** The available chain-derived data indicate approximately: 236.43B LUNC of taxable volume since 2 August. At the reference LUNC price, this corresponds to approximately: $11.77M of taxable activity. At a 1.5% tax: ~3.55B LUNC of tax was generated. Approximately: ~2.84B LUNC was attributed to the burn. The remainder was allocated between the Community Pool and Oracle Pool. **16. Volume Reduction** The available 36-full-day comparison indicates approximately: 49% of the pre-tax taxable-volume benchmark or approximately: -51% activity relative to the benchmark. The important mathematical threshold is: 1.5%×V-new>0.5%×V-old For the new tax to collect more than the old regime: V-new>0.5/1.5V-old Therefore: V-new>33.3%/V-old The maximum volume decline before the new regime becomes inferior is approximately: 66.7% The observed decline is therefore still comfortably inside the favourable range. **17. But Burn Efficiency and Market Efficiency Are Different** This distinction is critical. The tax can be successful from a supply-reduction perspective while simultaneously making the DEX market less efficient. Burn objective Tax revenue ↑ Burn ↑ Supply ↓ Market-efficiency objective DEX liquidity ↑ Arbitrage ↑ Price convergence ↑ Spread ↓ These objectives are not identical. A tax that increases burn but discourages arbitrage can produce: Lower supply + Greater DEX/CEX price fragmentation That is why both metrics need to be monitored. **18. CEX vs DEX: Two Different Markets** The CEX should currently be treated as the primary indicator of broad LUNC/USTC relative valuation. The DEX should be treated as an indicator of: on-chain demand, pool inventory, marginal executable price, liquidity conditions, arbitrage activity, and market fragmentation. This produces a useful distinction: Market Primary information CEX Broad relative valuation DEX Marginal on-chain valuation CEX/DEX spread Market fragmentation DEX liquidity Ability to absorb arbitrage DEX volume Actual on-chain trading activity **19. Recommended Primary Chart** The most useful future chart should plot both ratios simultaneously. xychart-beta title "LUNC/USTC CEX vs DEX" x-axis ["Jun 2026","Jul 2026","Aug 2026","Sep 2026"] y-axis "LUNC per USTC" 0 --> 120 line [91,95,102,104] line [null,null,79,79] Note: The DEX observations shown here are current pool snapshots rather than reconstructed historical monthly averages. Historical DEX observations should be generated from archived pool reserves before being treated as a time series. **20. Divergence Chart** The second key graph should display the spread directly. xychart-beta title "DEX/CEX LUNC/USTC Divergence" x-axis ["Jun 2026","Jul 2026","Aug 2026","Sep 2026"] y-axis "Divergence (%)" -30 --> 10 line [null,null,-24,-24] The zero line is important. 0% ───────────────────────── CEX = DEX -5% -10% -15% -20% -24% ───────────────────────── Current -25% -30% A move toward zero would indicate improving price convergence. A move further below zero would indicate increasing DEX/CEX fragmentation. 21. Five-Regime Market Structure The complete post-crash history is best represented by five regimes. 1. 2022 — Collapse <1 → 627 → 140 Extreme systemic dislocation. 2. 2023–2024 — Post-collapse equilibrium ~140–240 Broad relative-price stabilization. 3. 2025 — Compression begins 224 → 153 Beginning of a new LUNC-relative trend. 4. H1 2026 — Major compression 153 → 120 → 91 Approximately 41% compression from December 2025 to June 2026. 5. H2 2026 — Divergence becomes central 91 → ~102 CEX ratio partially recovers while thin DEX pools can remain materially displaced. This makes the CEX/DEX spread increasingly important.

LeonardoLUNC commented

2026-09-09 10:23:22 +00:00

Happy for LeonardoLUNC.org to help provide data for this going forward.

The tracker is already collecting chain-derived data every 12 hours, so if there are additional metrics that would be useful for monitoring this properly, particularly DEX/CEX divergence, taxable volume, tax collected, burn performance or anything else we can derive directly from Columbus-5, let me know.

The more of this we can measure from actual chain data over time rather than individual snapshots, the better the discussion around liquidity, arbitrage and the impact of the 1.5% tax will be.

Happy to add useful metrics to the tracker where technically possible. 👍

Happy for LeonardoLUNC.org to help provide data for this going forward. The tracker is already collecting chain-derived data every 12 hours, so if there are additional metrics that would be useful for monitoring this properly, particularly DEX/CEX divergence, taxable volume, tax collected, burn performance or anything else we can derive directly from Columbus-5, let me know. The more of this we can measure from actual chain data over time rather than individual snapshots, the better the discussion around liquidity, arbitrage and the impact of the 1.5% tax will be. Happy to add useful metrics to the tracker where technically possible. 👍

LVS commented

2026-09-09 12:44:13 +00:00

Author

@LeonardoLUNC wrote in #1216 (comment):

Happy for LeonardoLUNC.org to help provide data for this going forward.

The tracker is already collecting chain-derived data every 12 hours, so if there are additional metrics that would be useful for monitoring this properly, particularly DEX/CEX divergence, taxable volume, tax collected, burn performance or anything else we can derive directly from Columbus-5, let me know.

The more of this we can measure from actual chain data over time rather than individual snapshots, the better the discussion around liquidity, arbitrage and the impact of the 1.5% tax will be.

Happy to add useful metrics to the tracker where technically possible. 👍

Key things to track are the price on CEX (maybe a binance API as per SpaceRaiders message), and DEX price*, and the divergence percentage. I was merely looking at bigger picture of monthly, quarterly, bi-annual, to start the conversation, but it might be worth tracking daily or weekly and filter for the larger periods.

DEX price - we obviously have multiple DEXs/pools, the research focuses on Astroport, wrongly or rightly, as it was tied into the crash data. It would probably be best to capture multiple DEXs/pools data side by side with Pool inventory (how much LUNC and USTC it held), Liquidity (multiply the inventory by the price used for the day), to try and determine how much slippage and or liquidity depth has an affect - this could help determine the optimal Liquidity level, meaning we can put any excess funds to better use or get a better return.

All of this is difficult, because you need to simulate trades with and without the chain tax side by side, this would inform us how quickly bots would respond which would affect the divergence, at the moment bots are waiting for there to be a big enough gap to be able to capitalise on the arbitrage to make money, the running assumption is the divergence would be a lot tighter without the tax and more bots moving aggressively on smaller profit margins keeping the CEX/DEX divergence closer - the number of txs would be higher but not necessarily volume, this would come with deeper liquidity pools allowing for bigger trades with less slippage.

@LeonardoLUNC wrote in https://git.cl8y.com/code/cl8y-dex-terraclassic/issues/1216#issuecomment-48911: > Happy for LeonardoLUNC.org to help provide data for this going forward. > > The tracker is already collecting chain-derived data every 12 hours, so if there are additional metrics that would be useful for monitoring this properly, particularly DEX/CEX divergence, taxable volume, tax collected, burn performance or anything else we can derive directly from Columbus-5, let me know. > > The more of this we can measure from actual chain data over time rather than individual snapshots, the better the discussion around liquidity, arbitrage and the impact of the 1.5% tax will be. > > Happy to add useful metrics to the tracker where technically possible. :+1: --------------------------------------- Key things to track are the price on CEX (maybe a binance API as per SpaceRaiders message), and DEX price*, and the divergence percentage. I was merely looking at bigger picture of monthly, quarterly, bi-annual, to start the conversation, but it might be worth tracking daily or weekly and filter for the larger periods. * DEX price - we obviously have multiple DEXs/pools, the research focuses on Astroport, wrongly or rightly, as it was tied into the crash data. It would probably be best to capture multiple DEXs/pools data side by side with Pool inventory (how much LUNC and USTC it held), Liquidity (multiply the inventory by the price used for the day), to try and determine how much slippage and or liquidity depth has an affect - this could help determine the optimal Liquidity level, meaning we can put any excess funds to better use or get a better return. All of this is difficult, because you need to simulate trades with and without the chain tax side by side, this would inform us how quickly bots would respond which would affect the divergence, at the moment bots are waiting for there to be a big enough gap to be able to capitalise on the arbitrage to make money, the running assumption is the divergence would be a lot tighter without the tax and more bots moving aggressively on smaller profit margins keeping the CEX/DEX divergence closer - the number of txs would be higher but not necessarily volume, this would come with deeper liquidity pools allowing for bigger trades with less slippage.