This proposal is meant for those who still believe in Terra’s primary vision: Decentralisation. If you believe that UST failed because of our mistakes, and that a decentralised stablecoin is still possible, this is for you. This is not a for-profit proposal. It is subject to change as the community discusses it.
Rumours abound that Terra was the target of premeditated attacks. Whether this is true or not, we obviously screwed up and exposed UST to many attack vectors. I believe that without our many mistakes, we might have succeeded in creating a truly decentralised stablecoin. As such, I propose that we should fork and restart Terra with a new stablecoin, USC, having learned from our past errors.
USC will initially be over-collateralised so as to provide stability and support. Thereafter, dependence on collateral will reduce as the ecosystem grows more robust, and we develop its stability through proposals molded by mathematical models and intense scrutiny.
Luna classic is not the way forward, because:
- Profit-motivated speculators now hold the majority of Luna.
- Ridiculous dilution of Luna.
- UST now has a bad reputation.
- Nothing named X Classic has or ever will succeed.
Terra V2 as proposed by Do is also not suitable, because:
- It has no decentralised stablecoin, which defeats the whole purpose of Terra.
- Still centralised around Do and TFL.
- Airdropped tokens are just waiting to be dumped by people who’ve lost their life savings or are looking for a quick buck.
Proposal: Token Allocations
Luna and UST holders before the depeg will be compensated for contributing to the UST experiment. However, as stated before, users who lost their life savings will be desperate to realise their gains, dumping them as soon as they can. This threatens dilution and increases volatility. Thus, majority of governance tokens will be allocated to the community fund. Specifics are shown below.
- 10% to Luna holders before depeg (5 months cliff, 2 years vesting thereafter)
- 18% to UST holders before depeg (5 months cliff, 2 years vesting thereafter)
- 5% to essential developers (1 year cliff, 4 year vesting thereafter, granted after launch traction)
- 25% for builder allocation funds (No lockup)
- 42% to Community Fund, to be used as directed by governance proposals
- “Pre-depeg” snapshot to be taken at at Terra Classic block 7544914 (2022.05.07 23:00:04 +08:00)
- Vesting all vesting block by block
- Luna airdrop eligibility includes Luna, bonded Luna, unbonding Luna, and staking derivatives
- UST airdrop eligibility includes on-chain UST and aUST.
- Terra Core to be forked with the
marketmodules temporarily removed.
- New modules for the purpose of minting USC with corresponding USDT/USDC collateral introduced.
Proposal: How can we prevent USC from crashing like UST did?
As we saw during the crash, the peg stayed at 1 on-chain for much of the attack. Putting UST on CEXes exposed it to attacks too early, since the peg is difficult to defend on CEXes.
As such, USC should not be listed on CEXes, which threatens its stability. Any decentralised stablecoin should stay in a decentralised ecosystem, instead of a CEX, which is by nature centralised.
A decentralised stablecoin that lives mainly on-chain is more sustainable, as it reduces the chances of a bank run. Value is locked in the chain, because the chain itself provides USC fundamental value outside of speculation and gambling.
Q: What’s to stop CEXes from buying USC and listing it?
A: We hold no responsibility for that. If USC depegs on CEX, it has nothing to do with us. We want to make clear that USC is to be used and traded on DEXes and chains alone. Any CEXes that list it are irresponsible and profit-minded. Essentially, our only responsibility is the on-chain peg.
Since UST collapsed, authorities around the world have been pushing more strongly for CBDCs and increased regulation for stablecoins. A decentralised stablecoin is more essential now than ever. Given the lessons we’ve learned from UST so far, and the incredibly strong and talented Terra community, I believe this is naturally the next step for us to take.