A really bad plan to prevent VC short and crash monetary attack that only crypto can do

Don’t shoot the messenger. This idea sounds really bad. Probably very bad. In my head it is so bad it might just work despite the monetary impossible trilemma (not technically, but maybe practically). This is open to discussion, so I don’t put it in governance style for now.

TLDR; Get government protection…wait, don’t go yet. We offer a strong incentive to the government to prevent dumping our stable coin.

Prerequisite idea

  1. Impossible Trilemma means you can’t have your cake and eat it too in money stuff. You can choose only two of Can transfer money freely - Can set your own interest and policy - Can have a fixed exchange rate
  2. Crypto is a record on ledger. It becomes special with smart contract chain that the crypto can be changed on the fly, like bond them, burn them, and stuff.

The failed idea of UST

  1. Stable coin has Fixed exchange rate so it can’t have both of the other two.
  2. It fails because there was a big money dump, and people lose faith. They fear their 1 USD can’t be converted into USD anymore.
  3. Luna was supposed to be a volitility absorber, but took too long and it didn’t address the Trust issue

So, what if we have someone who’s capable of passive aggressively convince attackers to maybe not do that, to improve our trust issue?

A really bad idea I’m talking about
The big idea come from this. You know the rumor, right? VC sell short BTC. Sell BTC for UST. Dump UST out of peg. Terra crash. All Stable coin fear FUD. Crypto down. BTC down. VC buy BTC for cheap to cover the position.

How do anyone buy BTC? They pay USD. What if the moment BTC is down, USD goes down too.

Stop, Don’t shoot me yet. There is more.

I’m not talking about only the value, which we’d not have much sway, let’s face it, but in adoption - usage.

Ok, so you know big US of A is in a struggle to maintain USD domination, right? How’s that work? Easy. People like USD. They trust USD. They want USD over other currencies. Now imagine this special fiat coin called Coin-Not-Yen, aka CNY. Now this totally imaginary coin from the land that is very free has a pretty good peg to USD, and they run their monetary policy. They also allow free capitol movement, but some free is less free than others. Ok, you get the picture?

Now, say we have this coin called Moon Phase - This is a superposition coin. It has a stable value but you don’t know what currency it is until you go burn it. Stable value is pegged to USD, so it’s stable USD coin. TFG has to have some reserve of assets in USD value. They also have to maintain a reserve of this totally imaginary Coin-Not-Yen.

The idea is they have to maintain both reserve in ratio the coin exchange rate to USD.

If the coin exchanged under USD value, meaning too much Moon Phase on the market, TFG releases their USD on FOREX market. They then have to buy more CNY to maintain the value of reserve. In this case, if user come burn this Moon Phase token, they get CNY.

What this does is increase demand for CNY in exchange (by TFG purchase). Of course the total free country will maintain their exchange rate. If they want they can sell that CNY for USD.

If coin is exchanged over USD value, they can exchange Moon Phase for USD. TFG will have to sell the CNY to maintain the ratio and buy USD. This will increase the demand of USD in the exchange.

If coin is exchanged right around USD value, burner can choose whatever they want.

If coin is exchanged in any case, but price in that exchange swing so much it depeg, they can arbitrage the Moon Phase back for swap to value of USD in our darling vote token LUNA, or burn it to get either USD or CNY depending on which way the peg is going.

The value of Moon Phase will be shown on chain as the corresponding fiat, depending on the rate of the exchange to USD.

What does this all do?
If VC dump Moon Phase under USD, demand for USD will be reduced because TFG have to reduce their ratio by buying more CNY.

But the biggest point is if Moon Phase is reliably under pegged, we’d all be using CNY. Imagine the number of users on Terra that will think in CNY term, and no more in USD term.

That VC and TFG gonna have a long chat about USD domination with the congress for that. Neither want that, right? So we better work together.

Meaning as our ecosystem become larger, VC will have a harder time shorting our assets without harming USD domination. If no bigger hands intervene for their short, we’d basically help our new fiat overlord to the throne.

That’s the crazy part. You know all fiat maintain its value by their government, right? That there will always be that people in that country accept this fiat coin. That’s what no stable coin has. Now imagine that idea I proposed. The big hands have a chance. They can either protect us from VC, and we use our currency pegged to their value, or we ditch them with their fiat and use the opposite parties’ fiats instead. Note the plural. If this idea works in simulation, we might as well add an imaginary coin RUB which is pegged the the price of RhUbarB. Let me finish before you unload the mag.

The really bad part is that many big hands might try to attack our stable coin to hurt USD domination, but ain’t that what they do all day, all night anyway? It also guarantee to bring all eyes in the congress on Terra but they’re on us anyway. You think this crash ain’t gonna make it to the law maker?

Of course Terra community can also voted to change the ratio of reserve if one side getting too regulated and make us loses our monetary policy setting ability. This allow our peg, aka stable exchange rate to be maintained by our usual mean. Allow freedom of transfer as it’s digital assets. Allow us to set our own interest rates as it’s not a USD coin by reserve, but by the Phase of the Moon. And if anyone want out, come burn it for reserve using AMM.

I mean, why do we peg to Dollar anyway, if it’s not the US’s darling Dollar.

So, trade offer. also TLDR2
To big hands : Protect us from VC and we secure your throne. Leave us or oppress us and we join your “competitor”
To VC, You short our stable coin, we leave your fiat and also short it back.
To Lunatic, I’m sorry but you gonna have to content with converting your fiat after you burn token out, you’ll get the fiat that protect the value of your saving from VC.

This can only be done with crypto currency with smart contract blockchain. Otherwise, it’d be skewed to exploit fiat reserve.

The weak point of this idea is if one day that imaginary really free country decided to make all free movement of capitol equally free, with no free less free than the other, then … we need some serious math here and my head doesn’t work that well today.

That’s the idea I wish to discuss. I’m going to bed now. Booster shot is making me pretty sick.
So, how many shot you wish to unload on me from suggesting such heresy?

Comment away