Summary
Pegging the USTC back to the USD.
Motivation
In this proposal you can read a safe way to peg the ustc to 1 usd without pressure on the lunc.
Proposal
-Make the burning mechanism to peg the USTC-USD by 0.01 to start, with a daily increase of 0.0015cent
-A maximum burn rate of the 0.1% market cap of lunc. per day.
-In case the maximum burn rate gets reached in the day, the higher peg will be extended by +1 day.
I wrote but deleted explanations for the above proposal as I think the mechanics are easy enough to understand for everyone.
5 Likes
How will this prevent another crash though? It gets back to $1USD then what?
Well, firstly there is a very safe way upwards by going slowly and giving people the option to “get out”. So USTC holders can sell before its pegged to 1 USD which is just a discount for the rest of the community.
But to answer your question; It will only reach 1 USD if everyone who wanted to get out before 1 USD already got out.
So if, for the sake of argument, everyone would wait until 1 USD and decided to sell all at once at that moment, yes the peg would be broken but the burning mechanism would kick in not like it has in the past with maximum speed and killing luna with it, but with a max of 0.1% per day.
This would allow arbers to kick in and just buy up the depegged USTC and wait for the daily burn to recover the peg.
This daily burn is also not a heavy weight on the LUNC at only 0.1% of marketcap per day. which will only be reached in worst case scenarios anyway.
This system will create trust because even in case of a depeg, it will be pegged in the medium term always and that trust will in turn incentivize arbers to peg it before.
2 Likes
The main problem is the 10.25 billion in debt, LUNC can not sustain it, and is going to collapse again to 0.1 or 0.01 cents
The solution is to peg it permanently at these low levels
In my opinion, a stablecoin should be able to repeg as fast as possible. The whole point of a stablecoin is to always be pegged to 1 USD (or other currency). How can people trust a stablecoin that cannot quickly repeg? A de@th spiral is exactly this: the longer it takes to repeg, the more fear is created, making people less willing to hold said stablecoin. How do you explain to the average investor that the stablecoin will, in the medium term, repeg (but not now)?
There is no 10 billion in debt. You have to see those prices at current exchange rates instead of at the 1:1 peg because its not.
While pegging alot of cashflow will already go out before reaching peg and thus at a discount. This will organically find the equilibrium and will only raise when healthy enough.
You can check the case with the usdn. Their stablecoin also has another form of a timer on it. The arbers can only burn a set amount per 24 hour as well. It always got back to peg.
Its better to have a few days with a slight off peg then a crash once killing everything.
I dont want to sound insulting here, but f*ck do kwon.
We dont need this amateur who messed up this project in the first place. We are the community, the people who lost money and we can rebuild it better without him.
We should exclude him from the whole chain anyway, he should have no right whatsoever. Any remaining assets he has on this chain should he confiscated by a government and burned for the community.
My proposal can however perfectly recover the chain from this point forward.
2 Likes
If you like this proposal please share to get some attention towards it. It will increase the chances of a successful proposal. I will put up a proposal up for vote when we have enough people engaging.
Totally with you on all of this!
To me he is a criminal who ruined many many people’s life!
An interesting idea but I’m afraid I don’t understand this entirely.
who pays for the LUNC burn?
I believe we need a detailed analysis of luna - ust crash to understand what were the problems with the underlying mint/burn mechanics, rectify them + make the whole mint/burn logic better by adding more dynamics to it (for eq, make the stable-coins rate a bit more dynamic via making them floating based on current price stability, so basically UST =1 in normal conditions but when markets conditions are not appropriate then UST;s peg can be on floating discount for a while, for eq UST peg goes from 1 to 0.9 maybe to absorb pressure etc and then as the pressure gets absorbed it goes back to 1 )
the reason for the crash was the mis-management of Anchor protocol and lack of proper risk management practices, now if we are able to restore it and do things properly we can improve the space.
Terra was really fun to use, i don’t think we can get to the good old days anytime soon but if we do the needed work we can start making things gradually better from here!