Temporal Rebase UST to Repay the Debt (as like AmpleForth)

Governance & Proposals
1

Summary
Apply rebase algorithm to UST circulation to repeg, and provide UST holders with debt coins. The debt coins could be staked to share the network fees from terra network, until their loss are fully repayed.
Detailed parameter for rebase could be chosen by community or validator decision.

Motivation
Let’s imagine a man who does believe the potential of LUNA, and think the terra network is significantly under-valued. What he can do then? Buying Luna? It is obviously (at least has been) a suicide.

It looks much wiser to invest UST and hold until it repegs. As we have seen, however, this investment was not enough to peg UST back to 1$. This should be the reason that UST has still ~1B$ market cap without collateralized assets (let’s ignore Luna as it is now ~6m$).

In this circumstance, terra network’s value is obviously under 10B$. It means, current supply of UST cannot be absorbed by individual investors. We need to squeeze down the circulation of UST by a drastical way, which will eventually help the community.

Proposal

  1. Halt the current pegging algorithm. No more increase in LUNA until UST repegs to 1$.

  2. Apply rebase algorithm UST to all users.

  • It might need re-branding of UST, but it should be better than re-brading the LUNA.
  • Give enough time before the rebase, so every holders can decide whether holding UST or not.
  1. Rebase loss (actually it is not a loss) will be repayed to users in long-term
  • Give them debt coins (newly designed and printed), which can be staked to share network fees in the future.
  • Rebase algorithm can be consulted from AmpleForth.
  1. While waiting for UST repegs, Terra community can investigate a new pegging algorithm

Conclusion / Prediction
I am assuming that TFL does not have enough asset to help UST repegged to 1$. This proposal is basically fundraising from all users. If anyone believes the potential of Terra Community, they can just buy UST/LUNA and wait for the updates. Both are helpful.

LUNA circulation no more expands, which is actually good for LUNA holders (not good enough though). Also, it is fair to give some burden to UST holders little more because most capital reduction has been come from LUNA holders/buyers.

If this proposal passes, short term investment would go for LUNA and leave UST because LUNA has much less market cap than UST. On the other hand, long term investment could go for UST as it will be repayed by debt coins after everything get backs to normal.

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