Proposed Ziggy Fork + Escrowed Buyback (1/n)

Posting in this forum as it’s the most active.

For those who are unfamiliar, Onyx is the validator I was running on Terra Classic at a loss. It shut down in February, though there are plans to bring it back.

Below is the original post. I will attach the explainer threads below. Please ask questions, and I will do my best to answer them over the weekend.

0. Disclaimers

“USTC re-peg” is not an easy endeavor to address. Not only are you juggling the interests of billion-dollar-vested groups, you are also juggling the interests of new retail groups, and technically affected cross-chain groups – including other countries who are members of the TerraSDR. (This can be broadly summarized as the differences between LUNA, LUNC, and wLUNA, and every country who has a Terra coin, of which we have 22.)

Forks are contentious by nature. For a very long time, I have been against forks, rebases, and similar ideas because they are divisive by nature. A fork splits the community into two groups; a rebase crunches holder proportionality, which may reduce a small holder’s potential for vertical movement. (Again, the difference between lateral moves and longitudinal ones – like getting a new job instead of pushing for promotion.)

In no capacity am I guaranteeing any degree of success with what’s been set forth. Forking the chain and creating a simple commodity token with utility is virtually everything I have been fighting against for 10 months. Yet, I do not see many solutions outside of forking and/or rebasing, save one – onboarding billions of dollars in new capital.

1. Summary
Terra Classic has a multi-billion dollar deficit and a leaky ship. We must fork (patch the ship) and onboard as many “utilities” as possible, or usable products (fix the deficit). Three solutions are set forth for affected Terra holders – that is, LUNA, LUNC, and wLUNA.

2. Summary of Issues
In short, each affected group can be categorized through their token holdings. A Venn Diagram exists between all of them:

LUNA: >$18.85B of capital losses; innovation zone in need of capital injection (as research tends to demand).

LUNC: ~$2.85B of underwriting from a myriad of investors; ~$2.00B of runway burned to-date (estimates); necessitation of basic security for money remittance and exchange.

wLUNA: unknown number of losses caused by contractual error via string equivocation; this number is estimated to be roughly equal to the runway burned by LUNC as noted above (~$2.00B).

3. Motivation
In order to resolve “The Terra Problem,” as outlined above, we have to find a mutual solution that satisfies a majority of conditions in the central portion of a 3-part Venn Diagram.

This means recovering losses associated with wLUNA and leveraging the available runway associated with LUNC to strive towards LUNA integrations and development. It can briefly be summarized as:

$854.3M of available runway;
$2.85B in creditor underwriting (~$2.00B burned);
$18.85B+ in total addressable market value (TAM);

This means our Net Assets read as:

Net Balance Sheet: -$1,145.70M (~$4.00B target)

More or less, LUNC is in the hole by roughly -$1.1457B. The more time spent idle, the more of the runway is burned, and the more in-debt LUNC becomes. In order to resolve the debt visible in the price difference of USD <> USTC, we must leverage this opportunity to its fullest extent.

4. Proposal
This Proposal outlines the full Ziggy plan. Investors are provided three choices. (and a fourth, which is to do nothing.)

Fork LUNC to fix wLUNA <> LUNA

The core issue with wLUNA is that there is equivocation (miscommunication via protocol) between itself, LUNC, and LUNA. From a protocol standpoint, it relies on TFL to facilitate custodial bridging, or for users to route via Wormhole trustlessly.

Both are not ideal. wLUNA technically is unwrapping to LUNC, while protocol would suggest it unwraps to LUNA. As a result, it gets neither.

To resolve this, we fork LUNC. In the process, we port all assets from LUNC, currently, and then rebase the chain. Users who wish to stay on LUNC may cast a vote in this proposal, overriding their validators, or abide by their validators’ votes, in the form of No, to keep their assets on LUNC. A Yes vote means that your assets are ported to a new Terra network, with the chain-ids of ziggy-1 with a testnet stardust-1.

In this fork, we change LUNC tickers to LUNA, and remove all “Classic” identifiers on native coins (e.g., USTC et al) and CW20 tokens (ASTROC, stLUNAC, LunaXC, et al).

The result of this fork allows wLUNA to contractually unwrap to LUNA or LUNC (as they may bridge prior to this fork by choice), providing a choice, and more importantly, allowing them to participate in governance (as this cannot be done except through Ethereum market proxies, such as veCRV or vlCVX.)

In exchange for this fork, and a partition for a new token, Stardust ($SZT), the primary team leading Ziggy will escrow the total value of losses back to wLUNA holders (~$2.00B), subject to change, over a vesting period of 24 months or the total value lost (i.e. lent) plus interest ($600M), or a 30% rate on total amount lent. This means if this value is not met in 24 months, the vesting will continue until the total amount is fulfilled. If the value is not met in 24 months, interest rates on value lent will be renegotiated.

Utility of Stardust Coin ($SZT)

The Ziggy team is requesting a partition be made for $SZT – meaning that uluna remains the parent asset in this fork. In October, Tobias Andersen (Zaradar) proposed Partitioned Pools, where commodities could share a data-segregated portion of either the Terra or Luna pool (i.e., a partition) as part of his USTC re-peg plan.

In this case, as SZT is not a fiat commodity, it would share a pool with uluna. The weight of the pool in any future market-swaps would be determined via the Demurrage proposal outlined in the tweets above in governance.

In addition to providing a vector to test Luna-weighted index market swaps, SZT will be used as a simple commodity for creator markets, beginning with video games. Portions of the Stardust revenue will be used to buy-back USTC, as the chain needs to own 100% of the supply. This can only be done to the tune of $10B, and it is more likely that this can be done by staking LUNC and holding it until it’s at full completion.

For example, many NFT markets charge in LUNC, and the transaction fees can sometimes be in USTC. To allow value to accrue back to both, SZT will live on-chain as a quasi-ERC-1155 coin, where it can be fully-convertible to NFTs. The tokenomics are still under review, but the Ziggy team is currently exploring staking on-chain and allowing infinite minting (as data partitioning allows) to recycle what is spent on-chain – a kind of ubiquitous game currency.

Improving the Market Module

Currently, LUNC does not make use of the Market Module for Terra <> Luna swaps. Station also does not support Terra <> Terra swaps, making it effectively defunct outside of Rebel Station. In order to re-peg USTC, we must support this Module again by turning it on.

This means minting and burning. If this mechanism is turned on again, LUNC will hyperinflate again, as well as USTC and other Terra coins. This will send the value of all aforementioned coins to virtually 0 (but not 0) and increase the supply. As a way to provide users an option, we are offering the Ziggy fork as a way to insulate investors from volatility. For example, we can snapshot the dollar value of all user holdings, then translate to vested LUNC, USTC, or SZT (a kind of “pre-staking”). If you do not want this, or to participate in the fork, you assume personal responsibility for all events related to volatility through the re-enablement of the Market Module.

Improving The Market Module

Dangers of hyperinflation are well-known in the ecosystem, but to review, as inflation increases, the value of held assets depreciate. Staking, as a kind of quasi-bond, mitigate the effects of inflation, but are illiquid. Liquid Staking Derivatives (LSDs) allow liquid use while maintaining security, but is functionally different as an economic tool, and can easily fall out of parity. (for example, Lido Staked Ether stETH dropped ~26% and allowed arbitrageurs to purchase convertible governance tokens at-discount.)

In The Next Iteration of The Market Module, we incorporate a concept called demurrage. The Bank of London uses this to retire old coin and notes to bullion, or the precious metals that back those coins and notes. In Terra Classic’s case, our bullion is LUNC, and our coin and notes are USTC.

Currently, facilitating burns to the burn address terra1...anxu are not converted, at least to the user’s knowledge. (It is possible that this address functions as a cross-chain market module address.)

This means that when you send LUNC or USTC (or other similar coins) to the burn address, it is not converted to anything. (Again, as far as the user knows.) It is like taking $100 and throwing it in a pit of fire. To provide a corollary, The Federal Reserve mints notes at a rate of $0.17/$100 (more expensive for smaller notes). This means that they capture $99.83 of net profit (as they already budget these prior.)

A simple way of incorporating may be to incorporate demurrage at a rate of $0.17 per $100 burned, or at least, 100 units. This means that, by burning your coins, they can be converted to the opposite coin (eg burn LUNC, receive USTC), or more prudently, a third coin (such as BTC, ETH, ATOM, LUNA, etc.) This means we could burn 100 units of LUNC, then convert it into $0.17 of Bitcoin in order to back it.

If this is of interest, it would be prudent to ask Binance for assistance, as they have been an excellent partner in the process, as well as any CEX that has helped us stay afloat.

5. Frequently Asked Questions

Do we really need to fork?

Yes. Currently, the chain has new money flowing in, and it routinely flows out. It would be wise to solidify reserve levels and patch as many holes as we have been able to find to-date.

Does this mean we’ll fork again?

Yes. Instead of moving from columbus-5 to columbus-6, we may simply move to ziggy-1 and then fork to ziggy-2. This process continues until a singularity event is discovered (i.e., investments go to 0), in which case, you must always consider hedging your positions, no matter how confident you feel in the ecosystem and its forks.

I don’t want your fork and I don’t want to be on LUNC or LUNA. I want my own chain. Can I fork?

Sure, Magellan. Just ask.

How does this help UST/C?

Arbitrageurs aren’t made of unlimited money. They’ll trade a range from 0 > x > 1 and hit a wall. For multiple reasons, it makes more sense to fork, because there is no way that the chain can own 100% of the chain supply unless it’s equal to $1.00. Simply put, it just means that we need >$10B to justify underwater holders to sell, then enough to buy it back.

How does this help LUNC?

Demurrage offers a way to save money on-chain over time while removing supply. In many ways, this lets retail investors accelerate their opportunities to engage with governance mechanisms on-chain, which is primarily dominated by the largest holders.

Does this burn LUNC?

Faster than you’re able to do manually.

Does this burn USTC?

We’ve already burned ~$2.00B to-date. Isn’t that enough to move on?

I don’t understand what you meant by XYZ.

Then ask.

What about regulations?

It is important to understand that “Feathering” (forking) a chain like LUNC can be done any number of times as resources allow. In short, this means every country can be given their own version of LUNC, then use modules like Alliance to perform cross-chain swaps.

Brain hurts from reading… :frowning:

Right there with you.


We really wants buy-back Kwonzi(TFL) free tokens? When we can put 100%-tax for this wallets.
We really wants buy-back anoter 50% 1:1? When we can use 90%+ discount.


Forking LUNC and new coin? This is like abandoning LUNC again like TFL. No way.

So a dangerous experiment to the LUNC chain, as I have been saying.

Unlimited LUNC versions? Why not keep one and actually improve it.

As above.

NO WITH VETO at this stage from me.


I should begin by saying that you have done an extensive research into the chain and a lot of the things that I got to know from you and this proposal, are things I did not know about the chain before this. So I will compliment you for this work that you have done till now.

You have made yourself clear that this plan is no guarantee of a USTC re-peg. If that is so, then I have to look at this as a separate plan which concerns USTC and LUNC, but is not a direct implementation of a USTC re-peg plan from the current state of USTC as it stands. Instead, what we are trying to do here is buy back USTC by bringing capital back to the chain via different methods like the swap market module, WLUNA, and the additional forked chain.

This is massive. I mean, risking approximately 1 billion dollars of investments for a chain which has been created in theory till now isn’t something I would support since this would require the entire team undertaking this endeavour to signing a letter of undertaking in which you guys have to undertake 1 billion dollars of liabilities if anything goes wrong. Only then can this be approved. There have already been two events in which extra coins were minted. We cannot afford such an event again. If we go ahead with such a thing, there will be a legal liability undertaken by the team which takes this up, otherwise they will be sued/reported for sure. There is no question about that.

Do not fork it at all with the current accounts. Fork it without accounts and create new accounts in the new fork. Do not migrate any resources from the old fork apart from the settings. That is a much better solution. I would not recommend applying any kinda migration functions on the current chain columbus-5.

I do not think non-technical users understand the implication of this since it has been written in a technical way. To break this down in simple terms - the value of LUNC will fall by like, 10 times in one go. It’s basically an infusion of extra coins into the circulation. We all know what that results in. I get your point completely here and why you wanna do what you wanna do, but do you wish to do this during a time when the value of the coin is already less? Do you know how investors are gonna react if it falls by 5 or 10 times? They wouldn’t even know what hit them.

At this current point of time, we cannot bridge WLUNA back to LUNC. We will need to either wait this out, or even better, if you wish to bridge this to ziggy-1 and NOT columbus-5 I am completely fine with that. That will serve as your capital investment as well.

This is a great idea and should be implemented before implementing the new market swap module cause this will be a lot safer than directly dipping into the CP to use for swaps. If the CP can be partitioned then that solves a lot of issues for the future as well.

I think this is exactly what we should do with the market swap module cause this is not an easy task. If by chance anything goes wrong in code, an exploit could potentially lead to millions of dollars of money being removed from the chain, so please ask Binance for help on this one. They might even be able to provide us with a swap pool without doing all this. I don’t know. Talk to them.

I went through this and this is pretty good. I like the idea and this is definitely one way in which you can create stable coins. Yet again, I would advise doing this on a completely separate chain and NOT doing this directly with LUNC at first. If it works on a new chain, we can implement it on LUNC. This is at least what I think.

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I told you Agora is better. Now you got h a c k e d

Just last day we were talking about Agora and this being a better place to discuss this.


First, congrats on your research on this matter. Whatever the outcome will be, the learning process is always rewarding.
Since I believe that the UST repeg is a critical parameter for the revival of this chain I will say this, ask for help or even pay for help, not you but the community. We sit on a ~1B chain, we should act professionally and not be afraid of asking for help from experts.
First, if I remember correctly Do sometime in the near past commented that repeg of UST could be done but the hard part is how to keep it. Ask for help from TFL or even pay some developers to work on it. They have the expertise and the knowledge of the system and how it works, where the problems are, and probably they have done several brainstorming on this regardless of what some people from the community believe.
Second, contact Binance team. They are true supporters from the beginning. They run the best platform and control an enormous number of tokens. At least, they can consult us if the repeg is even possible, what the obstacles are, or/and if it is worth trying it.
It is a critical matter for this chain and does not need just a bunch of people to work on it and take the responsibility. Ask for help and if needed we should hire some people to work on it.


a transcript in simple terms would be appreciated

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This is the simplified transcript! :joy:


I admit this is daunting.
but it seems to me profoundly different from the repeg proposal voted in February, I have to deduce that it has been abandoned or ?

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I would like to express my thoughts on the proposal to create a fork of the LUNC/USTC blockchain. I understand that there have been some concerns, but I firmly believe that if executed properly, it could bring significant benefits to our community.

While the above proposal suggests that the fork should be optional, I suggest that it should be made mandatory. By doing so, we can ensure that our community stays united and avoid a potential split that may lead to fragmentation.

As long as balances remain untouched and unstaked, I do not foresee any significant issues arising from the fork. In fact, I believe that it could enhance the utility of our blockchain and bring new opportunities for our community.

This is not ok! This is not an issue for the LUNC community and was never discussed in any of the preceding props or signal prop.

As a side project for yourself, sure! But the focus of the repeg solution has to be USTC/LUNC and fixing the AMM

I respect you Duncan and you’re a smart guy but this is a giant leap from what you promised the community and I can’t support this being the main vision for a repeg.


No fork. No new coin. You need to read the room. That was a lot of work and hope building for something that has zero chance of passing.


yeah i must say i am little disapointed at this prop, not at all what i expected. And i cannot support it at it´s current state. No from me.


Just to add, from the google documents to do with this proposal, as posted on Twitter, see below.

He wants 0% tax and minting.

He wants 165k+ for his proposed team for 6 months of “business development” for “primarily games”.

He wants another team to manage the DAO for the forked LUNC chains.

  • wLUNA not our problem
  • any foking - its VERY-vergy bad pr for our chain

Our target - stop distribution and start buybacks/burns USTC.

P.S. I hope this 1st April joke.


His account is hacked on Twitter and he is missing. I think it’s a joke. April Fool’s. Good one Duncan.

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I posted in another thread but seems to be fitting here as well so lemme just C/P

I don’t believe LUNC Community is that stupid tbh. Repeg project from a guy who bankrupted on a 60,000 USD student debt and maxed credit cards? This is not someone who would be allowed anywhere around critical finance information, let alone algorithms that are supposed to steer a price of an asset. None of his business ideas to date have worked. Not to mention he is responsible for introducing the re-mint mechanism which eventually led to losing half of Binance partnerships worth.

No, community can’t be that stupid. Rite?


Either it’s some sort of an elaborate April Fools joke or he totally lost it.


Spoiler alert: it’s not a joke :grinning:


Yeah it’s not a joke guys. This is for real.