CUB is Flipping Deflationary | ~35% of CUB Block Rewards Are Being Bought and Burned Each Month
70k CUB has been burned as of September 13 and we are on pace to burn 300k by the end of the month, and that will push the total of burned CUB over 1,000,000. This amount will bring a different viewpoint to CUB and how bullish we are about this in the long run.
In the first monthly CUB burn report we talk about escape velocity: When the protocol burns more CUB than is being produced.
Right now there’s 840k CUB per month created (1 CUB per block) to pay the Liquidity Pool incentives on cubdefi.com, and right now 35% of that amount is being burned on a daily basis thanks to the multi token bridge. At the current pace of growth, we expect the MTB to flippen CUB deflationary: buy and burn more CUB each month than is produced.
Three things can happen in this scenario:
- The CUB price goes up and less CUB is being burned but the same $ value in revenue is buying and burning CUB
- The CUB price stays the same and more CUB is burned than produced via block rewards
- The CUB price goes down and EVEN MORE CUB is burned than produced via block rewards than before
In any of the 3 scenarios, CUB wins. If the price goes up, then less CUB is burned on a per unit basis BUT APYs will be higher since the value of the payout asset increases. This will lead to more attractive LP rewards and thus, more MTB liquidity.
If the price stays the same, then we are now deflationary. Buying more CUB than is produced in block rewards.
If the price goes down, then the protocol is able to eat up more of the supply and create an even greater deflationary environment.
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