Most of the people, including myself and another $ 14 billion, had entered land thanks to Anchor and native stablecoins. If Terra 2.0 wants to live, it must improve the only thing that made it unique and different from other chains: the stablecoins.
In this proposal I would like to discuss the real reason why Terra was created and how we could solve its fall.
This proposal will be constantly changing, as I am not an expert, I call ** ALL DEVELOPERS WHO WANT TO MAKE TERRA GREAT AGAIN **
If we look at the simple graphs of UST’s total market cap and the growth of LUNA and its ecosystem, we will notice how UST was the key to its growth and Terraform Labs’ marketing plan to grow the ecosystem.
Secondly, just read the whitepaper to understand the true nature of this ecosystem. It aims at the mass adoption of cryptocurrencies, creating a stablecoin etc …
So with Terra 2.0 without a native stablecoin (with which you can also pay the fees which was fantastic!) It would lose the sense of existing and also its added value that made it different from other chains.
terra money whitepaper.pdf (644.5 KB)
We therefore notice how the mistake behind it was that of having grown too much, too fast. The algorithmic system was fine up to a certain point, it was able to hold the peg in moments of past volatility, but then we all know what happened …
For these reasons we must improve the previous system to keep the essence of Terra alive.
The solution to add value to Terra in my opinion (if technically feasible) is this:
Keep the original stablecoins
As Terra it originated in Korea and their stablecoin and through CHAI was used extensively. Then we will continue to expand our market to all markets in the world by having their FIAT currencies.
Change the PEG holding system to a FRAX type system. However I still believe this could be improved (if I didn’t make mistakes that I am not aware of). The collateralisation of the stablecoin:
- FRAX can only be minted by collateralising Stablecoin (USDC, DAI, USDT, etc.). In this case, you could also add the option of over-collateralisation through other assets (BTC, ETH, BNB, LUNA, etc.) and to be sure maybe 200%.
- With the fees (in LUNA) generated through the transactions, given the volatility of the market, we could ensure that the over-collateralisation always remains at 200%.
As a final security system, we could set up a security fund which, in the event of critical situations, guarantees coverage of the funds.
In this way we preserve the stablecoin system initially developed by Terraform Labs, creating demand for LUNA as well.
Disclaimer and possible technical errors
I am not an expert, but from my little knowledge I have proceeded to give an alternative that no one has proposed until now.
Sounds pretty good to me, but I think there is something wrong, especially when someone could request their collateral back.
I believed in the Earth ecosystem, I believed in the decentralization of money, I believed that Earth had started a monetary revolution. Unfortunately was I wrong? I think something has done, you don’t become a successful person without failing, right? Earth was unique to the stablecoins it created, by eliminating them we destroy the ecosystem and our beliefs.