After reading this thread: Ozone Insurance Mechanism v2.1 - #41 by fusion, I take back my position. Coming later into the Terra ecosystem than others, I didn’t realize that the overage of LUNA in the Community Fund that is intended to be “burned” (ie. converted to UST) came from Seignorage and was meant to be properly burned the first time around (but wasn’t).
By converting this to UST to fund an insurance protocol we’re double counting the LUNA. I see the argument for wanting it to be a productive asset for growth but it really should just be properly burned and taken out of circulation.
I mean sure, the market may not even be aware of this issue and “burning” ~$5B worth of LUNA to mint UST and make it productive may have a net overall positive effect on LUNA price action, perception, and the ecosystem in the future, but it feels a bit dirty…
I’m not sure where I sit on the proposal now. I’ll likely be abstaining (not that my votes will move the needle a lot).
If it fails, I propose we actually burn the LUNA and then use some of the treasury assets to diversify the assets held by the protocol so that those assets can be used in DEXs to create a productive treasury.