Ok this is the general idea:
The price of LUNA in this current market is affected by two things :
- Price speculation
- It’s function as a reserve to help maintain the UST(and other stable coin) peg(s)
The current structure of this ecosystem begins to buckle when there is a huge demand to withdraw out of the terra ecosystem as this creates downward pressure for UST and for Luna. While i dont think the system is broken i think that in extreme situations the LUNA sell pressure caused by the stability mechanism comes with some inherent risks around liquidity . (Please bear with me im on my second pass of the the stress testing whitepaper)
To help soften the downward pressure and provide more stability to the peg and the eco system i think it is worth while to consider a mechanism in which Luna/ non terra stable coin pairs are incentivized.
And so the suggestion here is to build out a trustless yield farms that incentivizes Luna/USDC, Luna/DAI, Luna/USDT pairs.
Will probably make the most sense once we’re bridging non terra native assets on to terra chain but this could be deployed on ETH and BSC via wrapped assets. The idea here is this could act as a dynamic back stop where the community could intervene to help incentivize liquidity to help support the ecosystem in times of turbulence.
As far as the structure of rewards i think a base rewards should be offered in luna token , this could be 15- 20% APR , then if needed this could be scaled via community spend proposals from any of the terra native dapp communities , the idea here is that if we got to a point where it was needed we could bootstrap LUNA liquidity by incentivizing it with terra native dapp gov tokens.
This incentivized liquidity pool would of course work along side terra’s existing stability mechanism.
Edit: Here’s a link for the stress test report Stability Stress Test