Another repeg idea

Governance & Proposals
1

I’m not sure if this idea has been proposed before, so please forgive me if it has. Im not a coder or an influencer and my goal is not to become famous in the lunc comunity. The only thing I want is to increase the value of my bag so I came up with this idea and I would appreciate your opinion on it.

What is a stablecoin, and how can we create one that is truly stable?
The value of a coin is determined by the lowest price at which someone is willing to sell it and the highest price someone is willing to buy it. If we create a coin that we guarantee to buy back at the price of $1, it would act as a stablecoin because no one would buy or sell it for a different price on a centralized exchange.

My proposal is to create a new coin on the blockchain (let’s call it Coin B for the time being), worth $1 (or “pegged” to $1). Any new Coin B can only be purchased in the blockchain by exchanging Lunc at its market value. For example, at the current market value of $0.000125 per Lunc, it would take 8,000 Lunc to get one Coin B. The user would receive Coin B in his wallet, and the 8,000 Lunc would be burned. Coin B can be exchanged back into Lunc at the market value at any time, and the necessary amount of Lunc would be minted to give the user the correct amount based on the market value. This system allows users to have access to a stablecoin (Coin B) while reducing the supply of Lunc, potentially increasing its market value.

Transaction speed, super low fees, and no tax should be a high priority for transactions using Coin B, as it would be the blockchain currency.
Lunc would be the store of value. The more there is a need for Coin B, the less Lunc there is in the system. Transactions using Lunc should continue to be taxed (and burned).

Here is a list of possible events that could happen:

1- If the market value of Lunc goes up significantly, more people may want to exchange their Coin B for Lunc. This would not be a problem because even though there would be an increase in Lunc, the higher price of Lunc would allow less Lunc to be minted relative to the amount of Coin B circulating.
2- If the market value of Lunc goes up significantly, more people may want to cash out and exchange their Lunc for Coin B, which would decrease the supply of Lunc and potentially drive up its price even more.
3- If the market value of Lunc drops significantly, more people may want to exchange their Lunc for Coin B, which would decrease the supply of Lunc and potentially drive up its price.
4- If the market value of Lunc drops significantly, people may want to exchange their Coin B for Lunc to buy the dip, which would increase the supply of Lunc and potentially drive down its price.

Point 4 is the problem!
One solution could be to have a cool down period (or waiting period) for each Coin B arriving in a wallet before being able to exchange it for Lunc. If a user doesn’t want to wait, they could be heavily taxed on their transaction. This is an interesting solution as there could be companies with plenty of liquidity willing to make the exchange for the user in exchange for a certain cut.

If anyone has other ideas to prevent point 4, please feel free to propose them.

This idea is simple and easy to understand. From experience, simple works best. It does not rely on the good will of anyone nor does it count on every possible actors to play ball. I understand that it is not perfect and that a discussion is required to refine it.

Note: USDC could also be used in the same way as a store of value like Lunc, meaning it could be exchanged for some Coin B and vice versa.

2

It would be a coin without any reserve assets.
If only way to acquire it is to pay a dollars worth of LUNC, then the adoption of it would be rather slow as well. You would need utility to attract someone to use this method.

Burn your LUNC, get a token that is not backed by any asset.

Which would be fine with your run of the mill speculative assets like most crypto is, but a stable coin needs to hold its value and without assets to back it and no way to redeem its value back to a dollar…

You see the issue, right?

3

I do not see the issue you are pointing.
Fiat also is back by nothing. Yet we want something peg to something that is back by nothing.
The new coin would be back by the fact that you could, at any given time, exchange your coin B for 1$ worth of lunc. That is a form of safety. Therefor, not only it is backed by lunc but the “safety” that is provided is also a form of backing. Furthermore, its okay if adoption is slow. Anyways, we dont even have the trust yet. But… slowly, people will be more incline to use the “stable coin” as the price relative to the dollars will be stable compare to lunc, which the price could drop or climb 2x in one day.

4

Which fiat you mean? Not all of them are at freefloat.
But sure, lets take a dollar. Had gold standard, does not have it anymore.

Yet the economical might, wide use across the globe, financial mechanisms and powers that be do give it credibility.

What makes it stable enough not to depeg from a dollar? It has nothing backing it.
Why would I risk it? I swap my LUNC for it → LUNC gets burned. How do I swap back? Where do you get liquidity to allow me to swap it back?

What makes it’s price fixed?

5

thank you for your engagment.
The answer to your question is already written:
Coin B can be exchanged back into Lunc at the market value at any time, and the necessary amount of Lunc would be minted to give the user the correct amount based on the market value.

it makes it a stable coin because :
The value of a coin is determined by the lowest price at which someone is willing to sell it and the highest price someone is willing to buy it. If we create a coin that we guarantee to buy back at the price of $1, it would act as a stablecoin because no one would buy or sell it for a different price on a centralized exchange.

Lets say coin B price would be at 1,50$ in binance. Why would you buy it there if you could get it at 1$ (worth of lunc) in the lunc blockchain? Therefore, the price of coin B would have no choice to drop to 1$ at binance because no one would buy.
The other way around is also true. Why would you sell your coin B under 1$ at binance of you could sell it for 1$ (worth of lunc) in the lunc blockchain? Therfor, the price would have no choice to go up at binance because no one would sell under a 1$.

6

How? With no reserves?
It’s the most simplest of things - if have no assets, then you can’t give them back.

I swith LUNC to the stable. Lunc is burned. I get the “stable”.
But how do i swap it back if there is no reserve pool for it.
Basic tokenomics.

Again. You say you guarantee the buyback.
How? With what assets? No backing. No reserves.
No liquidity.

You are missing huge steps. Now you are already listed on a DEX.

1 Like
7

minting means creating coins… How do you think luna was working before? Imean…I dont know how else I could explain it. Thank you.

8

If you mint more supply, you reduce the value of existing supply.

Pool dilution.

Have you ever heard of “tokenomics”? Or basic finances?

I can’t explain it to you simpler: You can’t create lasting value from nothing.
Basic, fundamental education will be a great help to you before you make another wild comment.

1 Like
9

“If you mint more supply, you reduce the value of existing supply.”
Yes in theory it does. So, in theory, the burning of supply should bring up the value.
That is why there should be more burning than minting.
I have written the 4 situations that could happen and 3 of those would contribute to lot more burning than minting.
I asked help for finding solutions to the fourth one, wich would contribute to minting more supplies than burning.

Also, the real value is demand (use case). I believe that a stablecoin would be more in demand than a regular cryptocurrency. Think of the btc/pizza. Why would someone accept to transact lunc if it can go down 10% vs the dollar the next day? Or why would someone spend lunc if it can goes up 10% vs the dollar the next day? Buisnesses would want to use a stablecoin over fiat for many reasons: faster transactions worldwide, low fees, you own your own bank, etc

The idea that im proposing is to incentivise demand on the blockchain while reducing supply of lunc.

You are the only one engaging with me and although you are hostile towards me, i appreciate it. If you understand the idea, could you find a way to reduce the risk of the #4?

10

You are bungling up half truths.

First off: LUNC has a supply of 6.8 trillions. A trillion of it is staked. Some of it lost. Some if sitting on the chain and a large part circulating.

Now, the traders and day traders use this token due to its volatility and predictable movements.
Supply is rather stable.

It does not take much for LUNC to go up or down - there’s not many users nor traders.

If you mint this baby en masse you will screw up the frail balance it has.

Now. You are talking of a stable coin that:

  1. You mint out of thin air. It has no value
  2. You tell some poor sod - Oy, gief 8000 lunc and I give you this worthless token. I will tell you its worth a dollar. You can mint as many as you want.
  3. User exhanges 800 000 LUNC. Gets 100 dollars in your “stable”.
  4. You burn all LUNC.
  5. User wants to change the 100 dollars back into LUNC - he can’t. Why? You have nothing backing your token.

Besides that one poor sod - nobody wants this fictional stable since it can’t be used. Nobody accepts it. No CEX lists it.

Are you getting what I’m putting down?