I would suggest to mint another let say ~10-50% of luna supply and distribute that proportionally to those luna hodlers who on chain hold now and also held before crash. So true believers are rewarded.
This should rebalance holdings between hard core hodlers who held despite 2000000x retrace and heavy inflation and those who bought after. I guess new hodlers who bought in insane discount could swallow another 10-50% supply expansion for the sake of saving the project (after all they are also the believers right?). I see completely no problem having trillions of supply, its just unit of measure.
Community pool should be also part of rebalance as whole development will stop if original pool just evaporated due to inflation.
Additional mechanics to prevent quick liquidity withdraw in the future should be implemented and also perhaps as some people suggested put some burning fee 0.5-1% to onchain transactions to create some scarcity over time and reduce inflation rate.
What @dokwon is suggesting (Terra Ecosystem Revival Plan) will imho fail immediately after creation. Giving back 40% money to people who possibly sold after the depeg is terrible idea. Giving 40% money to UST hodlers is also terrible idea - repeg should automatically be established after luna economics is fixed and anyone who held through crash should be able to withdraw 100%. Those who sold in crash, well sorry to them. But they did not held life savings in UST out of their good heart … they did it so they can have 18% APY on anchor (btw this should be also lowered to more reasonable percentage). Giving 10% money to luna hodlers who held during some specific moment seems also very uneven as trading is still ongoing, this one smells quite fishy … not to mention legal consequences of fork and robbing some investors of everything, possible de-listing of exchanges,… lets not do any snapshot reset please.
Note: I did not hold luna before crash. I did dca through the crash and would have no problem giving old hodlers (those that did not sell) new chance. For me it would mean just another chance to buy even lower. Anyone who bought after the crash should share this sentiment as without any redistribution project will just end. This crash was not ordinary crash, it was crash within the crash of another crash… lets be nice to each other.
Edit (to answer some comments bellow):
My proposal to reward ‘holding’ during inflation should be general coin mechanics affecting everyone (since some block). Not just this particular event.
Problem is, that from gaming theory point of view, in case of inflation, best thing to do is sell everything and buy lower. This two facts ‘everybody selling’ and ‘supply expansion’ compound and contribute to price collapse which draw luna liquidity much quicker compared to the system in which people would be incentivized to hold during the inflation event.
Current inflation mechanics:
- 10 people each holding 10 coins worth of 1usd (total 100usd), average hold per user is 10usd
- someone mint 1000 coins (exits out of ust)
- new supply is 1100 coins, total value did not change (100usd), coin new value is 0.09usd, everyone (besides the minter) holds 0.9usd (everyone lost 10x) → everyone has incentive to sell during this type of events
Example how redistribution could work:
- 10 people each holding 10 coins worth of 1usd (total 100usd), average hold per user is 10usd
- someone mints 1000 coins (exits out of ust)
- actually 1900 coins are minted, 900 are distributed to holders (everyone eligible gets 100), minter gets 1000
- new supply is 2000 coins, total value did not change (100usd), new coin value is 0.05usd, everyone (besides minter) holds 5.5usd (everyone lost ~2x) → you would think that people are still incentivized to sell, but read further
- if you sold during this event and are not eligible for redistribution you probably only sold for 0.5usd as that was value of your holding (unless you did front-run the minter - but you can do that even currently, most of the people will not be able to achieve this)
- so even thou you are still loosing value during inflation, it is much better to just hold then to sell
- you still can benefit from inflation by buying cheaper, but price drop caused by the inflation will not affect your current holdings that much
Actually if it worked like this, it would cap losses incurred by any inflation to 50% (compared to current case 99.995%). Additionally as you might notice, minter (or in general minting during high inflation) gets actually less attractive as coins are worth less than they should be (0.05usd vs 0.09usd) at that particular time. This is caused by the fact that minted supply was big multiply of previous supply. If you only mint reasonable amount compared to actual supply, this difference is negligible. This would therefore discourage high liquidity withdraw from the system. It would be better to wait with minting to time when not so much people are minting or spread your minting as such that minted coins are always just small portion of total supply. You as minter gets the benefit to sell the coins first as everyone else would need to wait if they don’t want to loose their redistribution compensation.
Note that this mechanics will be in most cases pretty much invisible as nobody will care about small pieces if inflation is very steady. But it will become visible when huge amounts are minted. This mechanics will not prevent crashes, but it will help during the crashes which are caused by excessive minting.
I am sure there are lot of technical details and special cases to sort out, this is just very rough idea of some inflation compensation which should incentivize holding during inflation, discourage too large liquidity withdraw and possibly prevent this type of crash in the future - because regardless how well you did dca currently, if the excessive coin minting starts again, everyone will loose everything again.