A Long-Term Self-Bailout Procedure

This is a long-term proposal to save Terra’s ecosystem. It focuses mainly on influencing the price prediction of both UST and Luna for traders.

If you are minting Stablecoin, then you need to think like a central bank. So you need to adapt possible solutions to the hyperinflation problem and apply them to Luna, because the only way to save UST is to increase the market cap of Luna and bring it in line with the market cap of UST.

The main problem is that UST is not successfully pegged to the $1 and has lost confidence. UST is backed by Luna, and Luna no longer has enough market capitalization. So the problem is that UST is actually no longer supported.

The first thing the team should do (if it still has funds) is buy back USTs (below 0.20) as much as possible to control the UST site. It would also look for an external funding opportunity. At the same time, the Terra team should first sweep the floor and then announce a minimum price of 0.0016 for Luna to set Luna’s market capitalization at 11.2 billion UST. Since millions of investors have already bought Luna at extremely high prices, few lucky investors would sell their Lunas up to the minimum price. And millions of investors would gladly buy cheap Lunas, expecting to make a profit. Terra’s money should be used to buy back lunas below the minimum price and sell them above the minimum price. It will take some time to reach the price target.

To be successful, the team must also announce a plan to burn lunas and defer the debt (UST) until the price is set at $1. The fees and other revenue would also be used to pay off the bad debt.

Then finally the team also need a plan to make sure the market does not collapse again. That part is up to the technical experts.