Summary
All UST, and legacy Luna holders will be airdropped with Luna in an as fair as possible distributed manor which leaves no one behind but also makes no one rich.
After that there will be zero UST left and Luna will be rescaled to a reasonable amount.
For the future the Luna chain will relaunch with a functional mechanism for the stablecoin Terra which values is not looked to one dollar but stabilizes around it with either money or time as compensation.
Motivation
Many users don’t wish for a fork. I drafted a proposal that allows to keep the current Luna chain in its current use case to provide a self stabilizing Terra token.
Also it is questionable that a forked Luna will get any value without it’s initial propose of firing a stablecoin linked to it.
If the US government dept interest rate is to become negative all stable coins like USDT and USC will functionally break! Making a good implemented algorithmic stablecoin, even if not at any given time sustaining its one to one value to the USD (but in long term doing so) the superior choice for a stable coin.
Proposal
A fair mechanism is not an easy one so hold tight and read carefully!
Airdrops
Airdrops will be distributed to every body equally so that everyone’s share of the market cap before during and after the attack is preserved.
Luna holders:
Lets say the overall market cap of Luna was 30B at the pre-attack snapshot (which will not be used as no one lost anything yet). Now the supply inflates to double the tokens. Which means the 30B are worth 15B now. Adding 15B of “weight” to the first halving snapshot.
Snapshot 1/2: Weight 15B
(This snapshot correlates to the time were the supply of Luna doubled)
But people bought Luna and so the market cap during the snapshot 1/2 is maybe 20B and not 15B (the in-chain reaming value of the 30B pre-attack snapshot). For the next snapshot which is taken at another doubling of the supply we call it Snapshot 1/4 because a coin has now a quarter if it’s initial worth. We weight it with 10B half of the 20B market cap from the previous snapshot. Including the people who held to this point with 15B and the people that raised the market cap by buying into Luna with the rest 5B of value created. This also includes the value created by pumping UST into the Luna system.
Snapshot 1/4: Weight 10B
Now its repeats the next Snapshot 1/8 might be weighted 6B: 10B from people who held and 2B from pumps and than again halving the value because that is what was lost to inflation.
The percentage dropped from all Airdrops to the specific pool than is: The weight of the Snapshot 1/X divided by the sum over all weights. Were X is the multiplication of supplies compared to the pre-attack supply of Luna coins.
As an equation it would look like this:
For a person that never sold his Luna that would be 100% of 30B market cap! As he is included in every snapshot that was taken. For a person who sold at 25% that would be 75% of the 30B. The rest 7.5B would go to who every carried on. Sounds fair right? However once Luna lost 99% of its value one could fairly say that all value in the chain must be from new people. And this method perfectly compensates for that!
The last Snapshot than will be the so called after attack Snapshot. Getting a weight of the last market cap before the airdrop. No Airdrops will be given to this group as all Airdrops will be scaled to the market cap and supply of this end value. This is and stays totally fair mechanism no matter how long we wait for the airdrop to come because the supply did not change since the minting was deactivated.
All numbers here were just example and have to be replaced by the real numbers stored in the blockchain and on the markets.
The halving was only an example the “step size” could easily be more or less than 2x. With 1.11x, 1.5x, 3x, 5x or 10x being more examples.
UST holders:
As for UST holder the initial market cap was 19B but 8B got burned and are now compensated with Luna already. Leaving 11B market market cap to be compensated. One could fairly say that the UST to Luna ratio should be 11/30 taking the unburned UST value as a stablecoin and the Luna value before the attack.
Leaving us with:
≈36.7% dropped to all UST holders after the attack
≈63.3% dropped to the Luna Snapshots 1/X
New minting mechanism
If to much UST is is burned for Luna in a short amount of time, a fee is applied for burning every more Luna than the chain can handle at given time. You can say that a person does pay for any damage inflicted to the community itself. At the moment the Luna holders pay for all the damage alone. Which is why there is no stop of burning UST once started and the cause of the death spiral.
This fee means that during a chain overload caused by high sell pressure on Luna’s side. An UST holder could choose to create an amount of Luna which is worth less than one dollar per UST but creating it without a delay. Or make an order to get into a queue to wait until the chain allows to create exactly one dollar of Luna per UST.
This is similar as if you would go to you bank and ask to withdrawal 10$. They will just give it to you. Or ask for one billion dollar. In which case the bank likely would say that the withdrawal may could take some time.
If there is a high demand of UST in a short amount of time on the other side, one could also choose pay a fee and get UST immediately but paying more than one dollar of Luna for it. Or apply a queue and wait for one UST per one dollar of Luna ratio.
The difference (the damage fee) could be added to an autonomous liquidity pool that tries to keep Luna and Terra demand in check. By punishing one side and rewarding the other side.
If there is no demand on burning UST for Luna for example. The liquidity pool could give a small reward for burning UST. In order to keep Luna’s and UST’s demands in check. By keeping UST demand low compared to what the Luna chain can handle. And so making the chain more capable of dealing with high peaks of demand for one of the tokens.
This solution includes two solution at once you can either be punished by time or by value loss. Pay a fee to get UST immediately. Or apply a queue to get the stable worth but with time.
The normal state should still be that Luna chain can handle all demand. Such a mechanism would only kick in if there would be a huge inequality in demand, which would else lead to a death spiral or an unnatural value gain for Luna. Yes it would keep Luna’s growth natural sorry 
Ending words
This proposal was made to keep everything as fair as possible while allowing for a path forward and therefore a future for the project.
Feel free to discuss everything mentioned in the comments and point out any flaws in it. But please keep it as logical and neutral as possible.
Thanks for reading!