There’s obviously a critical flaw in the pegging algorithm that caused this collapse. Was there anyway that the algorithm could have been improved to avoid this disaster? Or is collaterization the only alternative?
Maybe they should only have allowed minting new UST if the market cap of Luna was at least 5 or 6 times higher. The UST minting simply went out of control and the market cap got so big that they couldn’t handle this dramatic event at all.
IMO they could have stalled growth and everything would’ve been fine after a certain point. I think the people who call for limiting mints have some point. But then UST would not have gained traction, Luna price would be low, and Anchor APY would be low as well.
There’s ideas for this! The following reply is from just one of a few plausible proposals (in my opinion) that addresses this subject, as a summary of sentiment/reasoning to repeg and work on current chain (linked below. the proposal itself has more details on hows and whys):
The idea to only allow minting when Luna cap is high is silly, because then UST would depeg a lot earlier. People won’t wait for their UST to become inconvertible passing the threshold, and would rush to exit before that.
I think the more sensible way is to cap the UST/Luna minting rate. That way value of UST would be a smooth function in terms of value of Luna.
There’s ideas for this! The following reply is from just one of a few plausible proposals (in my opinion) that addresses this subject, as a summary of sentiment/reasoning to repeg and work on current chain (linked below. the proposal itself has more details on hows and whys):
Edits, links to other proposals to repair peg andbecosystem.
Proposal with some similarities with ust as debt and ust bonds:
Here’s another proposal:
Another that includes the previous as well has burning plus governance restructure: