This proposal is intended to create deep liquidity for all Terra stable coins.
UST is the only Terra stable coin with high liquidity. the idea here is to create native Terra stable coin LPs. This would do a few things if the native LPs could be staked to a validator.
- Create more Liquidity for Terra stables
- People would not need to pay a swap fee only a network fee.
- People can now receive rewards from staking stable coins.
- In the event of Terra stables depegging a lot of stable coins could not be sold right away do to being locked for 21 days in the LP that is staked. (the derivatives would likely depeg temporarily)
- This would cause more Luna to be burned and better price action.