Proposal to Bond $UST v1 and create $UST v2

Basically things look bleak, I don’t think $UST is a failure but was under attack, I also think scrapping $UST wont solve anything as #terra2 would be no different to any other chain, what brought terra to where it is today is because of $UST. We can still recover through a bonding mechanism and reset through creation of $UST v2.

Fix terra and stick it to yellen

Basically we have 2 players we need to manage $UST repegging and $LUNA value increasing, I believe
this proposal can do this with 3 mechanics and creating a new $UST v2

  1. Bond $UST v1
    All current $UST is converted into bonds with varying maturities, so we don’t face a supply shock in the future. At maturity, $UST v1 bondholders can claim 1:1 $UST v2 + interest. Bonds should be tradable, so that participants who want to exit still can and buyers can pick up $UST v2 at a discount.

  2. Create $UST v2
    The new creation of $UST v2 will allow us to repeg and rebuild. This time with improved tokenomics and structure from the lessons we’ve learnt from $UST v1.

  3. Burn $LUNA to create $UST v2
    $LUNA will start increasing in value from here as the demand for $UST v2 increases.

I believe this will keep all participants happy, the infrastructure is all still there, there is value in the ecosystem infrastructure and this solution will retain it. Without $UST, Terra will be no different from any other chain. Think $OSMO with a 600m mcap, on this basis 1b $LUNA would be worth $0.0006.

Because of this getting rid of $UST is out of the question.


So what’s the process of bonding them? Stake in Anchor and convert them after a holding period of 1 year or so?


To reduce supply shock, we could do something like all $ust holders converted to bonds of varying maturities (3m, 6m, 12m, 18m, and possibly up to 10y) that way investors can trade their bonds depending on their original staking strategy.

Forking will kill the chain altogether. If you think there’s no trust for Luna due to the death spiral, just wait to see what happens post-fork. We’d immediately see whales and teams dumping or swapping. IMO, this proposal, coupled with liquidating of the coins the team bought to back UST, in order to buy and burn luna is the best way forward, along with requiring users of luna’s services to pay for those services using luna, which is immediately burned. If the best plan they have is to simply fork and pretend this never happened, the new chain is already dead and anyone providing liquidity won’t even be a speedbump on the path to 0


Very interesting proposal – I believe we need as simple and elegant solution as possible and this one just basically let us use the chain as it is. No need to agree on distribution/ repayment. All that needs to be done is to devise better/ more resilient USTv2 – maybe partially backed by LFG reserve (if there is any – still waiting for the post-mortem).

I hope this will get more traction.

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While I agree that Terra got here because of UST, this fails to address that what got us here is the perceived worth of UST which was to be nothing in a moment of crisis, hence why everyone ran. If the 11B UST still outstanding were to be bound, where on earth would that liquidity come from? We’d be back here once the bonding ends.

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Since they are bonded to Terra I assume you can also cap exit liquidity. Maybe process withdrawals over the course of a week or longer. I mean if you are invested in Gemini earn for instance and just invested in their own GUSD coin earning 7%, they will often take 1-2 weeks after you submit a request for funds before providing it to you.

You can say hey, exit liquidity is limited to a certain percentage of the existing trade volume. You can keep earning while staked in anchor, or just withdrawal in smaller amounts. Simply reduce the liquidity of withdrawals so it makes a limited effect on the market.

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That’s true, we would experience a supply shock if all 11b matured at the same time. Which is why I suggest we stagger out the maturities over a period of time, maybe even 30 years. That would make the protocol need to take on ~360m a year or 30m a month.

Could even start off small with smaller amounts in the near term, that grows over time.