[Proposal] A financially viable LUNC proposal

Governance & Proposals
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@rosanne89 @AtoZ Any chance to disable slow mode in this topic pls ? Thanks !

3 Likes
22

Hi @johny ,

That you Do Kwon?

As a fun exercise I compared Do Kwon’s original and second proposal discussion against the text in your proposal (removing the pre-filled headers that come in when you open a discussion in Governance and Proposals), and it scored you as 0.8 (on a scale between 0 and 1) - it scored me against my own writing as 0.83 (using the text from the proposal discussion that I wrote and tested it against one of my longer responses). From a linguistics perspective, both forensic linguistics and styleometry are fraught with issues - so it is only for fun.

I noticed that you have your profile blocked, which is what made me think to test (since the profile allows others to see your recent activity and posts all in one place, and gain a sense of your overall thinking).

That aside, as an initial thought, while I further think through the mechanics of your proposal, from my perspective:

  • if you remove UST, you remove a mechanism that not only sets it apart from LUNA 2 but which much of the monetization and dapps work from (although I believe that chain will develop a decentralized form of UST).
    • Note: I am not saying that there are not legal issues, just processing from the point of view of the whitepaper and sustainability.
  • At this point I am looking for a proposal that would fix the minimum necessary underlying problems (and then after those are solved to move to consider broader changes). I realize your plan would buy back UST, and then turn it off (which I agree would handle the issues in the protocol surround UST - although I am not sure how many residual problems that may open for dapps).
    • I would see the underlying problems with the current protocol as:
      • the mint/burn mechanism:
        • to adjust from hard limits on burn, around the mechanism used to control the peg of UST using the LUNA as working reserve, which caused the run to instead be based upon market pressure limits - something akin to:
          • always make sure mint-buy-on-market-and-sell are done in one step (even if there are many asynch processes),
          • market maker that has to not only add value to the book on the chain but must always contribute to the pegging - particularly when there is large market pressure,
        • to keep buying open in market pressure situations for the blockchain (using the same market maker + must contribute to peg mechanism as above),
      • the reserve (to have it expand beyond the working reserve of LUNA to include a non-working reserve that backs the stablecoin at least 100%, and the two reserve sets back it at least at 110% - 150%). This moves it toward providing catastrophic protections.
  • I believe LUNA “classic” is already a Layer 1 blockchain
  • The issue surrounding options is similar legally to the issues surrounding Anchor and MIR in terms securities, commodities, and banking. In the U.S. a DAO can still be determined a legal entity (ie. an unincorporated association, either by verbal or written contract or agreement), and it would mean that if any U.S. “persons”, including organizations, were involved, that it would need to be structured in a legal appropriate way.
    • I have to admit that put / calls and options are not an area I am too familiar with (and particularly perpetual options - and here):
      • although you said that the UST holders can exercise their option at any time, I would think that you are meaning after it hits the strike price conditions correct (either LUNC reaches $30)?
      • Would there be a specific reserve within the community pool that is untouchable except for this purpose (I did read you mentioned that it might be tied into a smart contract)?
      • Since they are perpetual, and if the market cap goes well, and then has downturns, and it crosses the $30 strike price, but they exercise the option after it falls, would that not put the community pool on the hook for something we would not be able to afford at that point?
      • On the DQE for LUNC (point 2), did your plan not already buy and burn the 6.499T LUNC at the price $0.00002 (although I will assume that you meant $0.0002 since it is currently trading at $0.00012, although maybe I am wrong and you are assuming that since there may not be enough exit liquidity that they would go for $0.00002)?
  • As a side note, I am not sure I agree with the airdrops, as much as I agree with encouraging people to hold, and to work through without liabilities (and if liabilities are going to enter the picture that they be minimized so that it does not just compound what has already happened with the crash in terms of trust, but also in terms of actually being able to perform the obligation - in your plan the options obligation).
  • I feel like raising taxes are difficult for recovery (you want to incentivize from an economic standpoint), and it does not look like your plan taxes, so that part looks good. (even while I recognize that those who have proposed a tax, with portion going to restitution, and burn of LUNC, have amazingly been willing to burn their own wealth in order for LUNC to return in value, and for the good of all, including those who lost so much investing in LUNA “classic” and UST and have held on to their tokens).
  • I don’t know why we do not finish the mint/burn process that was part of the run away minting - so the LUNA “classic” / UST pools properly balance. It minted all that LUNA, but if I am not mistaken, it never finished purchasing and burning the UST. That alone would reduce the supply in both pools, which would then increase the demand in both pools, and in turn would balance the value of both pools. For the LUNA that was minted, intended to purchase UST, but instead sat on the market and was purchased, then yes, I think a buyback plan could work for those. Apart from what you have proposed as a mechanism to purchase LUNA, there may be enough in the community pool for that, although I am not certain since they always tend to refer to the Luna Foundation Guard figures and I have not looked up the wallet address in the code for the community pool recently. The Foundation Guard may or may not include the community pool’s funds - but I would assume, since the Foundation is a separate entity, that the funds reported at least include funds outside the community pool, ie. the funds of the Foundation itself.

It looks like your proposal has a lot of work, and thought, and insight, and it is definitely a creative solution to the funding. It has given me a lot to think about - Thank you :slight_smile:

3 Likes
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This is an overly roundabout way to say you are making customers holding UST debt into LUNC assets, you want to wipe out existing LUNC holders; and you want a whale to guarantee $12B to exercise the strike. In theory they could reduce 6.51T LUNC for less than that with returns within a year. Why would they take your Do Kwon 3.0 plan?

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This.

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Hey ! No I’m not Do Kwon, I guess the 80% somehow only means it’s well explained/detailed/worded no matter who the author is…Actually I would appreciate if you could help switch off the slow mode :sweat_smile: :sweat_smile:.

Good to see you made the effort, the idea of this proposal was also to start some interesting discussion, and to think of how we can make things right and how we can move forward so thks for that.
In my proposal I focused mainly if not only on how to fund the buy back so I see your comments on UST and the network as complementary eg. the next step.

To me it feels like we’re trying to peg UST to something which is not in the network and controlled outside of the network and it is a weak link. I am very much a 1$ = 1$ person, because the risk is just too high, it only takes one mistake to blow an entire economy if not many and destroy many lives.
This said, I would see a lot of value in applying a real monetary policy and fixing UST as you suggested to use in a metaverse. That would be very cool, you could replicate real life mechanism to bring the experience to another level.
It would allow to experiment safely and better understand the link between fiat and crypto without risking to blow a whole economy. And hopefully this would naturally deter people from putting their life savings in UST. Perhaps thats a use case for the LUNC/USTC network.

The proposal in essence is saying let’s buy 6B UST + 6.5T LUNC with 130M$ today and the remaining using 400M LUNC tokens later when they hit 30$ each.
So we can skip the options and simply lock 400M LUNC, it’s completely equivalent.
Options are simply here to add a DEFi component to the network and generate some activity from day 1 by offering some exit liquidity.

Fine, just wanted to make it explicit that we rely on LUNC to generate/distribute value

Correct

400M LUNC tokens are set aside to exercise the options, see Point 5 in the DQE section: The DQE will be fully collateralized at any time and hence won’t stake its LUNC tokens, neither with validators nor any DEFi protocol. This must be enforced in the smart contract

It’s the option owner who has the responsibility to exercise the option so they can wait for the price to be deep in the money before doing so eg. 45-50$
We can use asian options so that we look at the average price over the last 7 days rather than the current price

It’s the DQE which burns but it’s just to keep things separate.
And no we want to buy at 0.00002$, it’s an OTC deal, you’re buying the entire supply at a price cheaper than the market. Market price is irrelevant, IMO there is only one counterparty, and thats the one we’re trying to convince to sell us his/her tokens.

I believe we did not finish the burn because we don’t have the LUNAs, they’re not on the market either, someone has them. And yep the idea was to bring the cost of buying back as close as possible to whats available in treasury.

What demand are you referring to ?

1 Like
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With a 2 Billion circulating supply, and a price target to exceed $30 to make any of this feesable you will need the marketcap to hit $60 Billion plus, making this the 4TH largest coin by market cap below only BTC, ETH, & Tether??? Meaning it would be more valuable than BNB even.

You offer no other ideas how to build value to this ecosystem other than burning.

Also you didnt discuss my point. You are giving 10% to the small retail holders. This is no different than what the new holders got from Terra2.0 (and less for the OG holders).

I agree we NEED to burn. That IS part of my plan.

Feel free to check it out and hoping to put it up to vote very soon.

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In theory OK, but concretely ? If you can make it happen fine by me, the sooner, the cheaper, the better

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Hi @Deathstar_Daddy, the network is currently not safe. It needs to be secured. Some holders have more than 30% of the supply, making the network vulnerable to a sybil attack. This needs to be fixed before anything else.
The burn is not here to increase the value of the token, this is only a side effect, it is here to prevent an attack.

@rosanne89 @AtoZ @mayankgrover733 @alagiz can we pls disable slow mode in this topic ?

4 Likes
31

Where can we vote this?

32

Make the proposal on governance , the big problem ate the validators

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Done: Terra Station

@AtoZ @rosanne89 @ThreeWolfMoon can you pls allow me to edit the proposal to add the TDLR from the proposal I put for voting ? Thanks !

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I don’t know how to do that

35

Perhaps we should make a case too…

1 Like
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Any ideas wont work until governance approves It. Unfortunately, you have to design some interesting for validators, devs and DK if you want to make It works. Otherwilse, they prefer have a de-ad CoĂ­n blocking any proposal

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thanks for looking into it

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Thks @BallinBeamen missed that one, i’ve been busy socialising :smiley:
Frankly for the distribution of tokens, I don’t mind at all, I’m really focused on the buy back, it feels that this should be debated or even put to vote by the community.

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Hello

Where is the link to vote?

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point taken @Atoj

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Isn’t it l1 already?

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I think that any discussion on a UST recovery should include a 3rd party, like a Prime Trust to hold assets backing the token. At least a very large % of it in order to gain credibility back. And it could be a process over time to regain trust I think.

But remember that some UST holders were partially reimbursed and honestly I haven’t dug into that and have no room in my brain to do it. That said, real money and real assets needs to be reserved so a run can never happen again. And how the mix of real assets and where it’s held should be a much longer discussion. Many are still holding UST from $1 who thought they had savings. I was speculating on Luna and got spanked, but others did not understand the risk of UST clearly and thought they were being safe with their investment.