The irreconcilable difference with saving LUNA is that depegged UST holders can mint LUNA at any time. This causes LUNA’s dilution to go up. LUNA can only help reduce small depegs. For large depegs we need to prioritize clearing out the bad debts first. The bad debt holders are the most willing to pay at any cost to dump UST. If we offer bad debt holders higher than the market rate to buy LFG Reserve stabilization funds which could be USDT, BTC, ETH, or whatever, then these bad debt holders do 2 things for us:
- They clear out USTs into the reserve so the UST supply goes down and thus UST rises in value
- When the UST repegs we gain more money to avoid a bigger fallout next time, and we can burn some of this money earned to help LUNA holders increase their value
During the depeg all staked rewards should go towards burning LUNA to help maintain LUNA’s price. Alternatively we can burn UST to help it peg faster, but it seems better to help LUNA holders wherever possible.
See