Burn The Remaining UST in the Community Pool + Cross-Chain Liquidity Incentive UST

Governance & Proposals
44

What the hell is Terra without stablecoin stable? please explain me… You even realised what you have invested in? you know what states the landing page in terra.money?

“Terra is a public blockchain protocol deploying a suite of algorithmic decentralized stablecoins which underpin a thriving ecosystem that brings DeFi to the masses.”

So your genius solution is to just let the stablecoin die? you think people left here will then trust your UST v2 ? Please explain me then how will you bring up value on Luna, cos I failed to visualise this… Do you understand that Luna value comes from UST adoption ? again, have you even read the whitepaper before putting money in Luna ?

Reading some comments I no wonder this disaster…

Me personally, I am seizing this chance, to heavily position myself in Luna, and increase my UST position as well… Maths can’t lie…

8 Likes
45

It’s a fair question, but it’s probably explained mostly by speculative trading activity. UST is now effectively behaving as any other crypto (most of which are highly correlated to BTC pricing activity). Why do so many tokens correlated to BTC is a core question for the Crypto world itself, but it is probably related to the activity of short sellers and bots.

Repegging to UST is basically impossible while there is a massive oversupply on exchanges because short sellers can simply buy up massive quantities at 0.30, wait until it reaches 0.60 and dump for a profit. LFG is known to be attempting to buy up the UST overhang and they are being brutalized mercilessly for their efforts. That is why it is so critical to eliminate the existing overhang.

That being said I don’t actually know the technical details of the market module that maintains the peg and am reviewing it independently in terra core source code

2 Likes
46

All I see is trying to find ways to peg UST to 1$ whether they will work or not is a different matter but I don’t see an implementation of a way to prevent such death spiral causing attacks. Did I miss something and did anyone propose or implement a solution for such an “attack” not to happen again once the peg is saved or it will be the same de-peg down the drain action again?

47

Maybe I not correct, but every transaction consumes UST or LUNA… So why not use half of transaction fee to burn over supply of LUNA? Yes, this might reduce staking %, but value maybe slowly goes back (since we stop making LUNA and burn it) and less LUNA bigger value. Until we back to 1B (this make take few years…). Though this is will not fix our current issue…

P.s. I didnt had a lot LUNA before (~3K USD), so its lost, so be it. But i am quite support for UST peg, stable coins (well for now not so much) are more attractive to people, easier to predict everything, can be more easier adapted in real world. Maybe no massive overnight profit, than value goes x2-3 in just one night. I assume some LUNA holders had it when it was 3-5 USD, value go up to 100 USD… And now complain about their lost from ATH.

1 Like
48

I have lost all my savings…feeling like homeless man…plz do some thing for Luna holders…we are like half dead

2 Likes
49

Can someone explain to me why 24 billion LUNA were minted today? Wouldn’t such actions bring the price down to zero?

3 Likes
50

It will not hit zero, just because before that happens more LUNA will be minted…

1 Like
51

Disclaimer: This explanation is based on a lot of piecing together of different sources that have been lost in the social storm. I will try to find sources and back/modify my answers, but this is my best understanding of the situation at the time.

TL;DR - A leveraged hand used insider knowledge to short UST and triggered a bank run. The reason the user had insider knowledge is because they had a detailed understanding of the Terra Ecosystem. Anyone with enough money, knowledge, and motivation could perform this attack, but the number of people capable of doing this is pretty small. Crypto barron or possibly a state actor, but that is speculation.

Long version

The attack was initiated by a liquidity provider who knew ahead of time that (via front-running/public chain observation via bots or other mechanisms) a major transaction (from LFG) moving through the system by paying a generous gas fee (around 34K, I’ll try to find the sources), dumped their UST onto exchanges, and destabilized the liquidity pool. The deviation of peg initiated a bank run, and panic selling at a loss caused the peg to spiral.

Part of the reason that the attacker was able to know about the the transaction ahead of time was because the speed of transactions moving through the system was set quite slow. the passed Agora Proposal has temporarily increased the minting speed which should help with front-running.

Front-running is a core issue here and it is a pervasive problem in many crypto projects. It will need to be addressed in the future, it is perhaps the primary issue that initiated the problem as the sophisticated and leveraged user had “insider information” not widely available to less sophisticated users.

The other problem is that there is no deposit guarantee (think FDIC) in this space. Secondary insurance is available to protect digital assets, but the utility of this is not broadly appreciated by the majority of crypto investors. The reasons bank runs do not occur in the US is not because the reserve backing of USD (because it doesn’t have one), but because the majority of people’s savings are backed by FDIC so even in times of crisis there is no reason to withdraw your money from banks.

It will take some time, but when the UST peg is restored, I suggest a mechanism for ensuring/gauranteeing deposits be explored. It is possible that [Proposal] Terra x Citadel DAO - Accelerating the growth of BTC/4pool is related to this, but unclear at the time. This is theoretically what the LFG was for, but clearly the mechanism is not strong enough and provides no real gaurantee to individuals on the ecosystem.

4 Likes
53

One other thing to consider. The approved proposal that increased minting capacity has allowed LFG and Terra to Mint massive quanities of LUNA to burn out excess UST. The way this mechanism works is that the excess volume of LUNA should still be in the hands of LFG and NOT circulating among exchanges.

Without $UST $LUNA is worthless. If we can restore $UST, I strongly suspect the oversupply of minted LUNA will be taken out of supply via bonding, burning, or some other mechanism, but it doesn’t matter if $UST doesn’t repeg.

The problem is the available supply of $UST being shorted as the repeg attempt is made. If you want to help, we have to take $UST overhang out of circulation.

5 Likes
54

Therefore margin trading on all centralized exchanges should be halted and margin called for UST and LUNA.

2 Likes
55

That’s a good idea, but it’s too late

56

Did you know, the minting can be undone by burning? restore PEG first.

3 Likes
57

I think we should face the fact that UST and LUNA are completely over, the death spiral will not stop, and only a hard fork will preserve TERRA.

58

i still have hope, I take luna coins and burn it too.
i know the developer doing good things, and i will take my part.
lets protect this stable coin guys

2 Likes
59

Shorts can keep UST down until LUNA is diluted to nearly zero mcap.

It’s more likely that LUNA gets buying pressure before UST but the dilution is too fast right now.

If you stop the LUNA minting and forget about UST price for the next week, let UST liquidate down to pennies to get the shorts out and then as LUNA rises back up, liquidity will be provided to re-peg UST with a more reliable code.

Use the 1.3b UST to incentivize LUNA buyers. LUNA must be saved first, then UST can be revived.

2 Likes
60

What does exponential growth look like six days from now? :smiling_face_with_tear:

61

@ Sli is right, we need to stop the LUNA minting right now.
or it will plummeted to atom…
atleast low it down

1 Like
62

I just tried to bridge over a bit of ust to bsc using bridge.terra and 5 hours still no funds. There are lots who are experiencing the same too. no way out :confused:

63

I think it’s time to stop the hook mechanism, although this will make ust and luna useless, but it also means a new beginning, can be redesigned, and time will smooth the user’s emotions. But the immediate priority is to stop this cycle of death. This is the problem that must be solved now. Then see the next step.

64

agree, but I think, as long as there is something left in the reserve funds, we just have to let it die down to some point, where it can be bailed out… and both tokens be brought in balance.