$HALO: The Charitable Token — part 3
$HALO’s prospects are compelling for both $HALO holders and holders of $LUNA, the leading light of the Terra ecosystem.
Here’s why:
- Every donation creates demand for UST.
Since donations from both fiat currencies and cryptocurrencies are converted to $UST, each donation creates buying pressure for $UST
✦ In the few months since Angel’s inception, 50+ separate Terra organizations have pledged to donate at least 1% of their annual revenues to Angel Protocol.
✦ Additionally, over $300,000 has already been raised for charity from new projects launching on Terra. Donating part of project revenues to Angel, whether directly or via charitable auction, has become a “rite of passage” for new Terra projects. To cite three examples:
- LOOP Finance: A whopping 10% of LOOP tokens have been set aside for an Angel Protocol-managed charitable fund
- A single NFT auction recently netted almost $40,000 for Angel Protocol and that figure is being surpassed almost weekly!
- Apollo DAO has committed to donate 1% of its Warchest revenue to Angel
As even more organizations and institutions pledge to donate part of their annual revenues, this creates a powerful recurring stream of demand for $UST. Moreover…
2. $UST is locked, creating a permanent price floor for the $LUNA token.
Powerful synergies exist between $HALO and the $LUNA token. For one, all $LUNA stakers will receive a $HALO airdrop upon launch, with stakers to Angel Protocol’s validator node receiving an additional allocation. For another, $HALO further rewards $LUNA “hodlers” by permanently locking $UST supply, creating positive upward pressure on $LUNA’s price:
✦ New donations are converted from other currencies to $UST
✦ This $UST is locked in charitable endowments, removing it permanently from the circulating supply of available $UST
✦ The resulting decline in available $UST necessitates a $LUNA “burn” to make up the shortfall, which decreases the circulating supply of $LUNA because 1 $UST’s worth of $LUNA is needed to create the required $1 UST
✦ Decreased supply of $LUNA in the face of stable (or increasing demand) causes upward pressure on the price of $LUNA
These effects may seem minuscule compared to a circulating supply of 2.8 billion $UST. In reality, they are anything but.
Charitable giving in 2020 was $471 billion in the United States alone¹. Globally, it is not unreasonable to call charitable giving a trillion-dollar market. Angel Protocol needs only to acquire a tiny slice of that market in order to single-handedly create a significant secular upward trend on LUNA price.
3. Risk Mitigation & Tax Benefits
Charitable giving is a time-honored strategy to mitigate tax burdens. According to the CNBC Millionaire Survey², nearly half of millennial millionaires have at least a quarter of their wealth in cryptocurrency. Younger, crypto-savvy investors who are considering profit-taking are very likely to look to charitable giving as a way to defray an otherwise-hefty tax bill.
Angel Protocol is ideally suited to offer the young and young-at-heart a noble option to support critically important causes while also exercising sound financial judgment. As donations grow, so do the rewards that $HALO stakers accrue: more donations = larger endowment yield = more value accrued per $HALO token.
One critical consequence of this “earn as you give” model is that $HALO is designed to be resistant to market downturns. $HALO derives value from the total value locked (TVL) of donations: a number that can only increase. Thus, while speculation may affect the price of the token, its fundamental underlying value is programmed to increase month by month and year by year in line with new & recurring donations.
Put more simply: while a severe market downturn might cause people to give less, the value of endowments cannot decrease.
As well: since $HALO stakers are entitled to $UST-denominated yields, their “return on charitable investment” is immune to price fluctuations. In other words:
✦ Since endowment yields are locked, the value of $HALO has a predictable floor
✦ Since yields are denominated in $UST, $HALO is immune to token price risk for the underlying collateral (i.e. as $UST is pegged 1:1 with the US dollar)
Article 4 in the series wraps up by discussing the governance enabled through $HALO, how it will be distributed, and looks forwards to the future. Make sure you follow the medium page for immediate notifications or keep an eye on social media.
¹ https://givingusa.org/wp-content/uploads/2021/06/GUSA2021_Infographic_Digital.pdf
² CNBC Online Millionaire Survey, accessed October 12, 2021. https://tinyurl.com/3syh982p
