Proposal for enhancing peg stability

The attack on the Terra-Luna ecosystem has had success because:

*) the big short had an immediate impact on the price;
*) the Team had no physical time to react;
*) the ecosystem had no sufficient internal-structural mechanisms to disincentivize deviance from the 1 USD peg.

Since the 1 USD peg is paramount for UST, I propose three (more) kinds of internal tools, at the blockchain level, to help maintain the peg:

A) artificially disfavor toxic transactions which would tend to depeg UST;
B) artificially slow down the speed of transactions which would tend to depeg UST;
C) internal automatic refill policy which tends to restore the peg.

A) Disfavor toxic transactions - The UST<->LUNA swapping set of current transactions is divided into two queues (each one organized in temporal order):

q1) transactions minting UST;
q2) transactions minting LUNA.

At each instant, the choice between what transaction of the q1) and q2) queue is going to be processed, is made based on a random function of:

i) the value of UST on the market (taken by an oracle);
ii) the volume of the transaction.

If the peg is within an acceptable interval (say 0.995<=UST<=1.005) the probability p is 0.5 for both q1) and q2). All is right.
When the price exits the peg interval (UST<0.995 or UST>1.005), the probability of processing a toxic transaction is decreased with a suitable law, which depends also on the volume of the toxic transaction, with p->0 as an extreme limit. The more toxic the transaction (in term of peg deviance induced and volume), the lower the probability.

B) Slowing down the speed of toxic transactions - When a toxic transaction, chosen by the random mechanism described above, is in any case going to be processed, the various hashing functions of the network are enhanced with some Password-Based Key Derivation Function, such as PBKDF2 or Bcrypt, with a number of iterations which is increasing with the size of the toxic transaction and the deviation from the peg. So, toxic transactions tend to slow down the network, giving more time to the Team to study countermeasures.

C) Automatic refill - The ecosystem has two tanks, one with LUNA and one with UST, that are strategic reserves previously acquired (similar to the BTC reserves recently acquired and used during the bank run). They are automatically used by the protocol when, during an attack with a bank run similar to that occurred, no one wants to launch a transaction that would tend to restore the peg (one of the two queues q1)-q2) is empty). The entity of the refill depends on the deviation from the peg and on the amount of the volume, up to a certain level, accumulated by the toxic transactions queued. For example, if q1) is empty, the protocol automatically launch a refilling transaction, that enter the queue.

Hope that some of these (rough) ideas can help.

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