In this guide, we outline what the Wrapped LUNA (WLUNA) token is and how it differs from Wrapped LUNA Classic (WLUNC). We explain why the prices can deviate and overview some of the key risks investors must consider when holding this token.
We also helps readers find the best way to earn yield in DeFi with WLUNA tokens by providing liquidity to Uniswap (V3).
What is Wrapped LUNA (WLUNA)?
Wrapped Luna Classic (WLUNA or WLUNC) is an Ethereum token (ERC20) that is pegged 1:1 to the price of Luna Classic. This token was designed by the Terra Labs team to enable investors to use their LUNA tokens on popular DeFi protocols like Uniswap or Curve Finance to earn additional yield.
As an example, users can provide WLUNA/WETH liquidity on Uniswap to earn up to 15% APY depending on fees from the pool. This unlocks extra utility for the LUNA token by enabling cross-chain interoperability.
WLUNA vs WLUNC
There is some confusion between the naming conventions of WLUNA and WLUNC. Both are the same token with the contract address 0xd2877702675e6ceb975b4a1dff9fb7baf4c91ea9 - however different exchanges use different branding.
Most platforms like Binance, Kraken, Uniswap and FTX use WLUNC as the token name, but Coinbase uses WLUNA.
How to add WLUNA to MetaMask
The WLUNA or WLUNC can be added to your MetaMask account by copying the contract address into your wallet. An easy way to do this is by visiting CoinGecko and selecting the 'MetaMask' button on the top right of your screen. This will automatically add Wrapped LUNA tokens to your MetaMask wallet.
What are the risks of Wrapped LUNA?
There are a few risks associated with investing in WLUNA. First, because it is an ERC20 token, it is subject to the same price volatility as other Ethereum-based assets. Secondly, as a wrapped asset, it depends on the stability of the Luna Classic price in order to maintain its peg. Finally, there is always the risk that the smart contract could be hacked or otherwise compromised, which would result in loss of funds for investors.
The chart below is the live price of the Wrapped LUNA Token (WLUNA) in US Dollars (USD).
LUNC Classic Price
The chart below is the live price of the unwrapped Terra LUNA Classic (LUNC) in US Dollars (USD).
Why does WLUNA not track LUNC Price?
While the WLUNA and LUNC tokens are intended to maintain a 1:1 peg, they have a tendency to depeg due to liquidity constraints. This occurs because WLUNA is a token only available on decentralized exchanges (DEX) and has significantly lower liquidity than the main Terra Luna Classic token.
This illiquidity makes it easier for market actors to manipulate or cause large deviations in the price of WLUNA relative to LUNC and WLUNC.
What is Terra LUNA?
Terra LUNA is a decentralized cryptocurrency built on the Terra blockchain. LUNA is designed to leverage Terra’s core technology to create a fully fledged digital currency that can be used for everyday purchases and made available to anyone who wishes to use it. Terra LUNA’s innovative approach combines secure, open source public ledger technology with an easy-to-use mobile wallet, allowing users to safely and securely transfer Terra LUNA with the tap of a button.
Terra LUNA offers advanced features such as atomic swaps, smart contracts, and decentralized applications that make it possible to build a secure digital economy on Terra. Terra LUNA also provides an unparalleled level of security by protecting user funds with advanced cryptographic algorithms.
Wrapped LUNA is a great way for investors to gain exposure to the Terra ecosystem. By providing liquidity on popular decentralized exchanges, users can earn additional yield and unlock extra utility for their LUNA tokens. Despite its benefits, Wrapped LUNA also carries certain risks such as price volatility and illiquidity risk that should be taken into consideration before investing. Be sure to do your own research and carefully assess the potential rewards and risks of investing in WLUNA before deciding whether or not it is right for you.