It does not make sense to continue the current chain. No amount of burning can help it. There will be no more new staking on the current chain, since the team is rightfully concerned about governance attacks (people buying hundreds of billions of Luna, staking it, and taking over the chain). So basically no more proof-of-stake since no one can change their delegation or stake anymore. This will continue to be the case even if burning takes place. There is no point continuing the chain as it is without staking or governance.
Any talk about reviving the current chain is just doesn’t work. Any talk about a forked chain is pointless unless the issues of the old chain are fixed (if they can be at all), and trust is restored. If trust is not restored, then there will be mass sell-offs on any forked chain. It will take time to figure out how to fix the issues in design of Luna that would have prevented this from happening or at least made it significantly harder for UST to de-peg and Luna to death spiral.
In the meantime, consider some of the compensation proposals as a first step. Those can be done within a few weeks. Forking a new chain requires not just forking the same thing but changing the code to make it more robust to attacks, finding capital to have sufficiently deep liquidity pools to make it harder for this to happen, and many other things. That should be viewed as a long-term plan if the team thinks that trust can be somewhat restored.
I know, but it doesn’t matter. There will never be staking on the current chain again because of the concern for governance attacks. Even if the proposed burning happens, all an attacker needs to do right now is to be holding Luna and not make transactions for a while. Then once the team lets their guard down and allows for staking again, then the chain will be taken over my malicious proposals.
Because of this concern, there will effectively be no more staking on the current chain and pretty much no more governance either.
You could buy now, then you would also have a vested interest in the current success of the project. I lost a lot, but also bought after the crash. I believe in the resources that the Community has, great ecosystem, we should support it - so they can fix the issues.
I agree with the concerns about attackers, but please consider their motivations when the chain is already on life support. The nice thing is that once the market cap of LUNA > number of UST, then there’s a path to slowly re-pegging UST. I believe that in such a case, there’s no incentive to attack, because you will become rich by encouraging the ecosystem.
However, right now we are in a good spot re: governance – the only stakers are pre-crash holders, who have maximum motivation to get the chain to a good place. We could simply wait until things are a LOT better, then slowly re-enable staking (for example, with a 2 month ahead announcement). In such a scenario, I think there would be plenty of good actors to counteract any pathologically malicious actors who don’t want to be rich.
Why does Luna marketcap > UST market cap matter? From my understanding, UST is not backed by Luna. Also, the re-pegging mechanism is not active right now and if it were to restart then Luna supply will start to increase again to re-peg it.
UST is backed by LUNA because you get rid of UST by minting LUNA. When the market cap of LUNA is big enough, then there’s enough “value” to do the exchange. Otherwise you get the death spiral we got.
By stopping redemptions when the market cap is lower, you stop the death spiral. But yes, UST will de-peg in that case. This should not be the long term solution. But it could be a short term one to bootstrap where we can slowly redeem USTs at full price. That will slowly re-peg UST.
Is there enough capital to get 5x LUNA price to that state? No one knows. But I’m willing to go for it with a burn tax. If the plan fails, we can still do a fork. But a fork will irreversibly divide people, so in my mind there’s no risk to trying this while it’s possible.
Not sure that Luna market cap > UST market cap is a sufficient (or even necessary) condition for re-pegging. It’s not sufficient because Luna’s market cap was well above UST’s market cap and we still de-railed.
I don’t see that waiting a few months to enable staking again would help. It still has the same issues since no one can trust the chain anymore to prevent the same thing from happening again, and the team would still be worried about governance attacks.
Yeah, that is a good argument about taking steps to save the current chain with a burn-tax, it would be irreversible with a fork. The burn-tax should be investigated before the implementation of a fork. It can always be done later, if the burn-tax fails to restore the value of the ecosystem.
I agree the redemption mechanism has to definitely change. My personal preference is that there is always a reserve of LUNA set aside from the fees for redemptions. That supply can be slowly built up, and of course no one would completely trust the UST peg until it was well over-collateralized.
I hear your concerns about the staking and governance too. Maybe a solution for that can be found over a longer time?
There needs to be a fork, but v1 chain will live on because even though there are real concerns with CEXs having all of the voting power, the CEXs can provide reasonable guidance for v1 chain.
Fork must happen without current governance input. Need off chain/forum consensus for fork point, and then all compensation proposals happen with “old validator/stake” (fork point allocation) set. Though fork point can also preset a UST/Luna exchange/conversion rate at fork launch.
Since v1 chain will almost certainly live on, the v2 fork should make no immediate compensation offers to v1 holders. Let v1 govern themselves to guide value.
ofc there will, there are many f us who will be willing to stake even with 0.APR to save the network,
the network can and will be saved if current management would be transparent and proactive…
and slowly slowly as price goes up foundation can buy back as I’m sure there will be loads of people who will sell as they are just here for speculation.
Market cap might be close initially. But 3.9M out of 4M wallets would do better with v2 state that abandons UST (fork with exchange rate of minted luna for UST that just doubles Luna supply to say 1B (@dokwon proposed 1B luna fork point so that would mean 2B total supply)
With 1B total supply (500M supply fork point, converting all UST to 500M more luna) $5B market cap would be $5 luna price. Letting most wallets have a 66% ust loss, and 90% loss on $50 luna, but still have v1 value and “salvage” value if they sold ust/luna post fork point. Most wallets now have dust luna value that can’t pay a tx fee on v1.
Although these are big losses, it would be better than dust value. Can keep Terra ecosystem alive and growth from that point. At $15B market cap, UST holders would be whole again.
This is a proof-of-stake chain that will not allow people to stake anymore. It’s done. The volume at this point is pretty much just gambling, with some buying in the hopes that their new Luna will make it to the new chain if it gets forked. Very few are buying Luna now to save the chain or maintain the peg.