Motivation
Decentralized stablecoin is the unique selling proposition of the old Terra. UST, low fees and high Anchor yields brought a lot of people here (including me).
In my opinion, new Terra will face hard times if:
— not restore users trust and confidence,
— not retain an army of loyal users,
— lose the main feature — decentralized stablecoin.
Proposal
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Create a new UST — an over-collateralized decentralized stablecoin.
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Create a dUST token — de-pegged UST. dUST initial value will be well below UST, but the value will increase over time (similar to aUST) until it equals UST.
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Each user receives compensation in dUST according to the snapshot at the time of the new network launch:
- UST/aUST holders receive dUST in a one-to-one ratio.
- Luna/bLuna holders receive dUST according to Luna’s price at the time of appearance (transaction) on the terra-address. If you bought Luna at a high price and kept it in your wallet, then you will receive appropriate compensation. If you transferred Luna from CEX today, you will receive compensation at the current price.
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When compensation is paid, old UST and Luna become obsolete (may be liquidated or burned).
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Create a new protocol to work with dUST (Anchor modification).
dUST protocol carries out 3 tasks
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Accumulate UST income in Protocol Pool from different sources:
- reserves of the Luna Foundation Guard (initial source),
- additional fee for each transaction on Terra,
- interest generated from UST borrowers and collateral staking (Anchor principle).
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Provide up-to-date info about:
- dUST circulating supply,
- Protocol Pool earnings and savings,
- dUST/UST exchange rate.
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Allow dUST holders to burn dUST and get UST at the current price.
Additional info about dUST price (dUST/UST exchange rate):
- dUST price is determined by the ratio of [Protocol Pool] to [dUST circulating supply].
- dUST price is driven up by Protocol Pool income.
- dUST price increases over time until it equals UST.
- Burning dUST does not affect the price, but accelerates the growth (recovery) of the dUST price in the future.
Example
dUST circulating supply: 1500 dUST
Protocol Pool: 18 UST (new over-collateralized stablecoin)
dUST Price: 1 dUST = 18 / 1500 = 0.012 UST
UST left to restore the peg: 1482 USTJohn burned 3 dUST for 0.036 UST
dUST circulating supply: 1497 dUST
Protocol Pool: 17.964 UST
dUST Price: 1 dUST = 17.964 / 1497 = 0.012 UST (unchanged)
UST left to restore the peg: 1479.036 UST+2 UST in Protocol Pool
dUST circulating supply: 1497 dUST (unchanged)
Protocol Pool: 19.964 UST
dUST Price: 1 dUST = 19.964 / 1497 = 0.013336 UST
UST left to restore the peg: 1477.036 UST
Summary
The refund process will take years, but people will have a clear plan and hope to regain their funds.
Everyone will always have a choice:
- get some UST instantly by selling or burning dUST tokens at a discount or
- wait for higher dUST price and higher returns.