Variant to Do Kwon proposal. It could repeg UST. It’s more fair to LUNA holders at the depegging event that didn’t sell their LUNA sendiing it to the floor
As Do Kwon stated, Terra network’s core are UST and other stablecoins, not LUNA token. Everything must be done to keep UST pegged to the US dollar, and the other stablecoins pegged to their respective. To make it happen we need to incentivize only buying UST while deincentivized selling it.
Demand must be higher than supply.
Fiat money is a government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. The value of fiat money is derived from the relationship between supply and demand and the stability of the issuing government, rather than the worth of a commodity backing it. Most modern paper are fiat currencies, including the U.S. dollar, the euro, and other major global currencies. Fiat Money Definition.
UST buy: we should have a multichain AMM that fulfills UST buy order when it’s available on the market at less than ($1 - transaction fees), otherwise protocol will mint UST fo every $ worth of LUNA sold with no transaction fees
UST sale: at market price if UST < $1 for its $ worth in LUNA and than burnt, while if UST >=$1 it would be redeemed for $1 worth of new minted LUNA and than burnt
It’s better to hold to UST and use it only as means of payment than to reedem it. Having faith that it’s not going to the floor again, it should’t if it’s not worth selling, but it’s worth using it.
I know it sounds insane, but after all who sells UST and the other stablecoins is the one exiting the network, meaning he already has done profits (trader/speculator) or he believes is a bad investment (already accepted a loss).
Doing so would strongly deincetivized the shorting of both UST and LUNA in external market.
To do so, we would need a lower Max Supply for LUNA (currently 6.9T, insane thinking that USD circulating supply is 2.1T) and capped at 1B. To make it happen a fork is necessary. As I stated this proposal is a variant of our founder’s. I don’t agree with the distributiton after the network reset, since LUNA holders before the depegging event woud have 40% pro rata at said snapshop (Total Supply around 500M) even if they massively sold their LUNA sending the price to the floor, on top of that if they had some of their holding staked they would have had a massive returrn in Luna rewards, that would give them a massive share of the 10% distributed to LUNA holders at the final halt not rewarding enough all the small holders that tried to to save the network until the end. I genuiny think it is too much.
So, in short, SNAPSHOT, FORK with 1B Max Supply, Fixed algorithm to incentivize only buying of UST and other Terra stablecoins and deincentivize the sale of UST even when it is > $1
25% pro rata to LUNA holders before the depegging event
40% pro rata to UST and other Terra stablecoins holders at the snapshot
15% pro rata to LUNA holders at the final moment of the chain
10% to the community pool
10% to be issued to validators as rewards until Max Supply is reached