There are a number of proposals to restart or fork LUNA block chain.
However, most of these proposals did not address the importance of stable coin in Terra Ecosystem,
Terra Ecosystem won’t be Terra if it does not have stable coin and the protocols associated with it.
Creating a new chain or resetting Terra without stable coin will not create significant value.
Here is to propose to recover the Terra Ecosystem, keep the stable coin Ecosystem, while would be financially feasible:
- Fork Terra to May 7th, 2022, 00:00 GMT (just before the de-peg event)
- All $LUNA holders continue to have same $LUNA2. Let market decides $LUNA2 value
- For every two $UST, issue one $UST2, same for other stable coins
- Give time for each protocol to integrate with $UST2 to help user recover a discounted value
It is impossible to restore the original value to the Terra ecosystem. This is confirmed by CZ, and by @dokawn here
As @dokwan mentioned, $UST is a debt obligation to Terra.
For the recovery plan, instead of granting $UST holders new token with variable value, it would be better to grant $UST holders fixed value token at a discount.
At 2:1 ratio $UST to $UST2 conversion, this will immediately reduce the outstanding debt obligation from $18B to $9B.
Combined with $LUNA2 cushion and stability fund, it will create a sustainable ecosystem for the next version of Terra.
Here are the steps:
- Halt the current Terra/LUNA chain
- Fork Terra/LUNA, create LUNA2 chain
- Reset LUNA2 chain block production with snapshot at May 7th, 2022, 00:00 GMT (just before the de-peg event)
- During initial phase of $LUNA2 chain launch, halt all stable coin transactions initially
5.List $LUNA2 on major exchanges, let market decides the $LUNA2 value
- On $LUNA2 chain, for every two $UST, issue one $UST2. Similar for other stable coins
- Give time for all protocols, such as Anchor, Mirror, Pylon to convert user’s deposit from $UST to $UST2, with 2:1 ratio
- Work with Wormhole bridge, issue $UST2 token for other blockchains, with same 2:1 ratio
- Increase Mint/Burn capacity as in Proposal 1164
- Establish stability fund ahead of time, and plan to purchase $UST2 at discount if it de-peg
- Enable stable coin transactions on Luna2 chain, and list $UST2 on major exchanges
Why we must recover $UST
$UST is the soul of Terra Ecosystem. A new protocol without $UST stable coin won’t have enough value for the user communities.
There are many other competition to Terra. Without the stable coin Ecosystem, a revival plan will have low chance to the upside.
Protocol integration, such as Terra, Mirror, Pylon, is important to the Terra community.
The recovery plan should include the key protocols.
Issuing $UST2 stable coin will help these protocols and the user communities.
Cross Chain Deposits
A number of cross chain protocols hold a large number of $UST. E.g. Curve, Uniswap, Saber, etc.
Work with Wormhole to issue $UST2 for every two $UST will help user community recover a portion of their value invested in stable asset.
$UST on Exchange
Similar to other part of the plan, centralized exchange can claim $UST2 for every two $UST from the snapshot block.
Exchange can provide airdrop to its users.
Please kindly share any perspectives and suggestions.