I know it’s not intentional, but this comes off as a bait-and-switch to both UST holders and LUNA holders.
@dokwon, the only way for any currency to gain confidence is if buyers can expect to get what they paid for…
…and the only way for any new Terra project to gain confidence, is if the old Terra project ultimately kept its promises.
You say that you want to preserve the Terra ecosystem. How do you expect for it to gain people’s trust for new products, if it retroactively rewrote its obligations and its policies the first time around?
UST buyers paid for a promise of 1:1 on-demand redemption for dollars. They did not buy a share in Terra: If they had wanted that, they would have bought LUNA. Terra sold them each a promise of $1 per UST—no more, no less.
Perhaps they cannot be paid immediately because the Terra network is, in substantial effect, an insolvent debtor with liabilities exceeding assets. Perhaps. If so, that should be handled accordingly: There are customary and acceptable ways of working out a payment plan for an insolvent debtor to discharge its obligations as much as possible, as fast as possible.
LUNA buyers at all times paid for a fungible token equal to, and indistinguishable from, each and every other LUNA. And there is nothing unfair about the potential for high profits: To the contrary. Those who made an extremely high-risk investment by dumping money into a dying coin deserve to be rewarded commensurately to the risk. Those who did so as LTH are visionaries who made an all-or-nothing bet on Terra’s success, at the moment when it was reasonable to expect for LUNA to go to zero. They not “marginal buyers”. Indeed, some of them probably care about Terra’s stated mission much more than FOMO buyers, who paid much more when they wanted to get in on the big green candlesticks.
(Disclosure: I am one of those. So are some of my friends, whom I persuaded to throw money into LUNA on the way down. Although I am a relative newcomer, I do think I’m the type you probably want to keep here.)
For both UST holders and LUNA holders, it is unfair to switch them to something different than what they bought—all divvied up in a way that seems arbitrary.
A brief counter-proposal:
Make an unequivocal public declaration that Terra’s overriding priority is to make UST holders whole. As much as possible, as fast as possible, not stopping till it’s done. Work to calm fears that UST holders will be switched to something different than they paid for.
Draw up a payout and re-pegging plan, from the perspective of an insolvent debtor who earnestly wants to keep his promises.
Implement creative ways to incentivize the mass-burning of cheap LUNA, based on self-selection by STHs and LTHs. That problem may be more tractable than it seems, because much of the public is currently treating LUNA as toy money. Sure, many people scooped up LUNA for cheap; but most of them will treat it as, “easy come, easy go!”