This is the first draft of a proposal which is supposed to deal with a scenario where CEXes do not comply with the community demands, assuming that on-chain burn will not accomplish anything at all.
The purpose of this proposal is to gather the community’s opinion, and should the community consider this absurd, how we could improve this proposal.
Please keep your insults and bitterness elsewhere, I have already said that this is not a 100% perfect proposal, and need your help if you are interested in improving it.
I am assuming that people, for some reason, will not like the idea of having a deflating currency, and will provide many arguments on how deflation is a bad thing.
I am also assuming that there will be proposals to make LUNC a utility coin and that people will not like such an idea.
Another proposal that may technically work (but would probably not get accepted) is to filter the LUNC coming from the exchanges so that they account for much less until the balance of distribution is established (for example, if I withdraw 100 LUNC from the CEX, I get, lets sat, 0.1 LUNC on-chain while the rest is burned)
So, what would be the possible solution for this extreme case scenario?
Instead of blacklisting the CEXes and their accounts, simply increase everyone else’s LUNC amount, and inflate LUNC while leaving the special CEXes accounts untouched.
With the 1.2% on-chain burn, we would normalize the amount of LUNC, while the amounts that are located on the exchanges will normalize in respect to LUNC price.
I am aware that this sounds like a backward step, nevertheless, it is a possible solution.
These are some thoughts that I have. The amount of zeros, excluding the decimals, is 256 and therefore, we have plenty of room to inflate LUNC.
The price drop will not affect anyone except the holders on the exchanges. This means that we will have to notify people and give them enough time to move their assets.
It may happen that some exchanges will move their assets too, thus preventing us to succeed with a plan.
Furthermore, inflating LUNC should be a fair step which would approximate the amount of USD each account had before the de-pegging event. We should also transfer any losses they may have by inflating LUNC, and after the event happens.
I believe that this inflating step should happen before the actual pegging takes place.
List of some PROS:
People’s assets would not be affected
More volume will happen
More LUNC will be burned
It may encourage more investors
List of some CONS:
LUNC price would crash
With a cheap LUNC, some people may keep their LUNC on exchanges and 1.2% burn is still not going to work well if there is no on-chain burn.