Community Treasury--Leveraged Buybacks

I’ll preface this by saying I’m ok if the answer is simply that all seigniorage was intended to be burned and thus that’s the route to go BUT, if the reality is that it’s truly up to the community to decide what to do with excess Luna beyond 10M I just wanted to float an idea out there…

Luna on exchanges is getting pretty thin, what if we decided to mint bLuna with all of our excess community Luna and then take an aggressive loan from anchor and use that UST to buy Luna off the market? Basically leveraged buybacks. Corporations do this all the time to bolster their share price, can’t we as a community use our capital in a constructive way that boosts our value in the long run?

I don’t know the full legalities of this and if TFL would have to abstain from any voting that took place, but I’ve seen many ideas floated around about what to do with the excess funds so I wanted to just float the idea.

Something along the lines of:
Mint to Bluna—> Borrow UST—> Buy Luna from exchanges—>Collateral value increases so you can withdraw some and instant burn back to Luna and permanently burn.

If this is perfectly within our legal right to do, one potential issue that could arise would be that once a quorum would be passed, bots/traders would be interested in front running the market buys, so perhaps some sort of leveraged buyback schedule would need to be in place. Perhaps someone has an idea on how to mitigate this.

Again, if the team feels strongly about a straight up burn with community funds then I’m okay with it, but if we can use the funds for leverage to increase the scarcity and burn of Luna (the ultimate goal), I don’t see why we wouldn’t entertain the idea.

What if that bLUNA collateral/loan goes underwater and gets liquidated?

What if you set a buy wall at a price point where the Luna on exchanges is mathematically incapable of breaching that point? If we want escape velocity and to not be controlled by bots who arbitrarily sell us off against btc/eth levels, isn’t this a good way to do so? We have an armory of community funds that can rival the amount of Luna on exchanges. If we can fight back with it, I think we should.

And frankly speaking, setting up a buy wall would stop the few who clearly can benefit the most from bullish dumping to force liquidations to rebuy positions at a steep discount. Until Harpoon goes live and bids can get more competitive, the chance for further bluna liquidations elevates and increases the risk on centralization of ownership since the bidding isn’t open to everyone until Harpoon goes live and the bidding process can become more efficient.



Just voicing the concerns that I’ve heard from many and opening it up to discussion re: short term vulnerability with anchor liquidations.

Re: the community funds, as I said I’m perfectly fine with burning all excess funds if that’s the direction you, the team, and the greater community want to go in.

Burn excess Luna to convert stablecoins, ups Luna price, place stable coins in Anchor account still as a community pool OR use the stable coins generated as ANC deposit APY and share burden with bLuna borrowers (or up APY amount even more?).

I think it would be better to either fund real investments (real as in the economic sense - funding development of new projects) or burned. This seems like speculation, not genuine treasury activity.


Agreed, we’re at the phase where funding new efforts will likely be more beneficial than buybacks

I think some may have missed my intent for this discussion. We don’t need hundreds of millions of dollars to fund projects with excess community funds. We’re likely burning everything over 10M tokens. This was in the hypothetical situation if all those funds were fair game and not to be burned. TFL has token allocations (i believe 20% of supply for venture partnerships so excess funds arent needed to fund real investments per your suggestion). The whole point was that if everything over 10M tokens in the community supply was technically convertible to UST or able to be minted to bLuna, by the very laws of supply and demand we could have bought our undervalued token since the economics of what’s available on exchanges are in favor of buyers from a game theory perspective. We would have actually increased the value of our community position and then still could burn all of the proceeds for even more of a supply shock. Our excess community funds exceed the tokens on exchanges. I was merely saying there’s probably a game theory angle to play since I think it can be argued we trade below cash in any scenario where community funds alone could buy up the float at a given price point. I was just trying to make this point–nothing more.