To further support this proposal, I have worked out a mathematical formulation of the burning rate for both LUNA and UST towards achieving the targeted circulating supply. You can download it for the following link and apply your own parameters to shape the burning curve differently (only change cells in purple):
The document has three sheets according to the following:
1. LUNA burning Pre-Pegging to achieve a circulating supply of 1 Billion from the current circulating supply of 6.53T tokens. The burning rate is a function of the circulating supply as follows:
2. UST burning Pre-Pegging to achieve a circulating supply of 750m from the current circulating supply of 11.27b tokens. The target was determined as per the available collateral of 25000 BTC valued at $750m at the current market price. The burning rate is a function of the circulating supply as follows:
3. UST burning Post-Pegging as a function of the UST price to prevent and punish any future similar attacks. The lower the price gets, the higher the burning rate of the transaction. Such a hefty tax will prevent attackers from making any profits and will prevent panic sales pressure. The burning rate is a function of the UST price as follows:
Few extra notes:
- The burning should mainly apply to sellers, not buyers. Applying the tax on buyers will defy the purpose which is to encourage buying and holding.
- In case we want to apply the tax on both buyers and sellers, then I would suggest the ratio to be as 3:1. Meaning, sellers should encounter 75% and buyers only 25% of the overall burnt percent.
- If we wish to compensate those who sold at the moment de-pegging happened, those users can be whitelisted and get 0% taxes on purchases of LUNA or UST.
- Post the pegging, UST should work as a standalone token and implement a tax on sales happening of the pegging value. This will prevent any attacks for financial gain.
I hope this is adding some value to the overall proposal and future of LUNA/UST.