[CommunityPoolSpendProposal] Burn Pre-Col5 Community Pool

Burning whatever is required for Ozone is fine. But burning all of the UST after whatever is taken for Ozone? I’m not sure I understand that.

Just spitballing here: what if we put the extra UST into Anchor and used the 20% yield to increase staking rewards for Luna? We could always access the principle later in the future, if the funds would be useful for another initiative - or if Anchor reserves drop and need another top-up or whatever.

Instead of keeping assets in UST or LUNA, why not utilize wormhole to trade some assets for USDC, TUSD, ETH, or BTC. Even bETH would be great, so it could be used on anchor protocol. Burning doesn’t do much help as we think it will and diversification is key.

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I think by keeping UST “in house” keeps the risk and doesn’t do much help.

I tend to think that Luna appreciation by UST increasing demand. If you burn all to get that huge number of UST, I assume demand for UST wont catch up. Maybe we start with a lower amount to see how demand on Cosmos shows up? probably incentivizing UST-other token(s) LP with Luna from community fund?

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This is the main point.

If there is too much wealth aside (easy to pick up), then you have a real problem with motivation to do anything new. And also sooner or later you will be questioned (and than trolled) how you manage that wealth instead of how you manage (develop) your product.

So burning most of it makes sense. Get that burden out of sight. And if there is a need for a new round (or new viable venture/protocol) I believe many investros are willing to put their money…

Less BS, more building.

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Wouldn’t it be easier to wait a day and see what happens

@dokwon love the willingness to take advantage of UST and LUNA’s unique token-economics.

88MM LUNA, or ~$3.6B at today’s price is a massive burn for the community. We acknowledge the potential impact it will have on LUNA rewards and holders, as well as the merit in creating insurance.

Do you have an estimate on a more accurate cost of Ozone? What will be done with the remaining proceeds from the mint / burn?

It seems as if the Community Pool will be depressed for two weeks then topped off with all the UST generated from the swaps minus the cost of Ozone.

I really like this idea but maybe a smaller portion dedicated to guarantee/match the 10% minimum APR for LUNA stakers?

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Thanks Ser, always keen to decentralise knowledge about project. Hope you didn’t mind question, happily waited a day, and I see Proposal 133 unveiled.

Originally it was 5x staking rewards and then revised to 10%. Just couldn’t see how either would be achieved based on public info. Not sure prop 133 will get 10% rewards either, unless some unstaking also, hence question about comm pool, where it’s stored and is it staked.

Many thanks for the all your fine work, the building is much appreciated.

I have a quick question. What are we supposed to do with excess $UST in the community pool after the swap and Ozone is funded? I mean, way too much wealth is concentrated in there, no matter how many projects need funding.

I have some ideas to be rolled out before EOY that I believe will make UST significantly safer and more attractive to hold and use.

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While I understand this sentiment, wouldn’t it be more prudent to retain this wealth as protocol-owned-liquidity, with the result being that we can both strengthen Terra and eliminate ‘lazy capital’ from the grant ecosystem?

With the level of available funding (excluding whatever is utilised for Ozone) we could establish extremely deep, permanent and benevolent liquidity pairs for LUNA’s most strategically important pairings; bLUNA-LUNA, bLUNA-UST, LUNA-UST, ANC-UST, for example. We could even take this cross-chain if the protocol governance could handle it, and build a deep ETH-wUST pool on UniSwap or SushiSwap, for example.

The associated LP fees would flow back into the Community Pool in perpetuity, and be available for grants, LP-position re-investments, one-time UST airdrops to Luna stakers etc.-- whatever ideas are originated via further governance initiatives.

This approach would negate the need for traditional liquidity incentives (liquidity renting) and would instead give rise to a number of income-earning, diversified and strategic LP positions that support Terra both through liquidity provision and by providing a diversified, income-producing, indirect Community-Pool backing for Luna.

@dokwon - Is this approach (both economically and technically) feasible, in your view?

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Shouldn’t we wait for a project like white whale to be live? What assurance that a flood of luna burning that will more than double the current market cap of UST wont destabilize the peg?

Who holds the keys to this burn wallet? I assume it’s multi sig? What backstops are in place to prevent missing funds?

Additionally there is no mention of the change in proposal 133
“subspace”: “oracle”,
“key”: “RewardDistributionWindow”,
“value”: "“9400000"”

Why is this different than Prop 44 “Burn all Seigniorage" (5256000 * 3)? This look like only 1.8 years vs the 3 years in Prop 44? Was this intentional, what was the reasoning?

  1. I control the burn wallet - stealing 3B is not the game theoretic optimal point for me, so I will not
  2. That particular change is in Prop 134 - this changes the reward distribution window set in prop 44

This is to allow the rewards to be distributed over a slightly faster schedule (24 months) versus over 3 years (current distribution window), which in practice turned out to be too capital inefficient

Yeah thats not how any of this works

Why do we need bLUNA-LUNA, Luna-UST pools to have deeper liquidity? They’re already pretty liquid

I am thinking of critical pairs that we would always want to see liquid, even in a crisis. bLUNA-LUNA may not be the right option, but I recall the spread widening fairly significantly during prior Anchor deleveraging events, so it came to mind.

The UST-LUNA pair is quite liquid during normal operation, but in a panic or bank-run scenario it is foreseeable that the existence of substantial Benevolent Liquidity in this pair would provide both a natural brake during a potential bank run, both mechanically via pool rebalancing and psychologically (simply knowing that substantial permanent exit liquidity is available). The accrual of LP fees on this pair is also attractive, given its high volume of trade.

I have not thought this all the way through yet (just catching up on the forum), but I think the use of LPs to form a substantial portion of the Treasury may have merit if we can use those LPs to create the UST pools we want to see on key chains.

You’re not supposed to use LUNA-UST liquidity during a bank run - why would you ever do this

Hi @dokwon , so if i understood correctly you will directly control the burn wallet? How it is possible that such type of activity is not automated? Of course i’m not questioning your good intention, but it seems huge critical point that this transaction needs to be handled manually