Summary
I propose to remove using UST as gas fee since it’s more corresponding to the whitepaper design.
Motivation
We have seen recent meltdown of UST and LUNA. The reason behind this is that when UST is de-pegged, user are incentivized to mint more LUNA and dump it.
“During a contraction, the system mints and auctions more mining power to buy back and burn Terra.” as the whitepaper stated, LUNA is not the only representative of mining power since we can also choose to pay the gas fees with UST.
As a result, there is no reason to hold LUNA when de-pegging other than dumping it and performing arbitrage. This makes the de-pegging event irreversible. After a serious de-pegging, the oversupply of LUNA will dilute the holder’s value and make people not hold it whenever de-pegging happens.
Proposal
I propose to remove the usage of UST as gas fee. This will make holding LUNA necessary, even when during de-pegging events. People need to pay gas to perform arbitrage.