I would have to respectfully disagree with you @dokwon - I think saving the project is completely doable (although I can sympathize with how difficult this past week has been for you, and on you).
As far as I see it:
- Both LUNA and UST are assets (A) that are tied together. When they cross markets there is a liability (L) and the net result is equity (P). A - L = P.
- LUNA is the governance coin (and a reserve), UST is the stable coin. Both have value. Both back one another up. The net of both added together are the assets (in addition to any outside reserves that are owned by the DAO governance holding LUNA).
- Contrary to belief, UST and LUNA are backed by real money - it is the buying power of the money received (or expended) when the coins were / are initially sold (or bought back) (there may be some other forms of monetizing as well - but this is the essential essence).
- The minting / burning is really just an algorithmic way of moving funds from one supply market to the other in order to bring equity. So, this is real money, both Terra and the DAO will be responsible for this legally. You can not just burn or mint without actual value behind it.
- Some have asked why the supply of UST keeps growing - people are selling it faster than it is being purchased with LUNA (burned in exchange for mint in LUNA). However, I will say that the market cap is still in the billions (even if the pool size is diluted). This is why the minting process was exaggerated in LUNA, in order to buy back UST to diminish the UST pool size (making it more scarce, and therefore more valuable - and since LUNA was what was mainly being used to do that, it made LUNA less scarce and therefore less valuable). It is supply and demand.
- The problems have been:
- the burn / mint rate was hard set rather than set based upon volume of sales / exchanges on the Terra blockchain
- no automated volume level restrictions on sale of assets (purchase of assets should not be limited)
- stopped purchases at the time adding buying power to the assets was needed (although I do realize it was to prevent a run on sales and the value of supply and trust level - the protocol should be amended to allow sales to be rate controlled while buying is not). If there is a reason buying would present a problem to the ecosystem, then that supply should be purchased and held in reserve.
- loaning money from reserves to market makers rather than using it to buy back UST to diminish supply and raise the value (Terra could have done this themselves, or the Governance could have done this)
- there may have been an emergency plan that the Governance had approved, but if so, it was either did not exist, was not followed well, or it has room for improvement (which is probably true for every emergency plan).
- throwing in the towel when there is still 3B in market cap for LUNA (it is just diluted right now), and 2B in UST (as of 5/14 at 4:37pm CT). This is more than enough capital to restart this project - new projects would love to have that much capital to start with. Will it be the 40B dollar size it was - no, it has already lost size, and you will need to start where you are at 5B. But, this is more than enough to both save LUNA and UST over the mid term by burning and minting as buying power is still available in LUNA, buying back UST with remaining reserves, and then as UST pool size shrinks, slowly resell UST and covert it to LUNA (by burning and purchasing back LUNA). This is how every single person eventually can regain the value of their LUNA and UST. No bailout plan is going to get your money back with the exception of pennies on the dollar - wouldn’t you rather wait it out and potentially get the whole amount back and have the opportunity for growth? The community can vote on whether they would like a guideline in place for who, such as low income persons or those who had savings account products, are paid back first if there is a desire to provide more immediate help. If not, then something that instead is easy and equally applied to all based on their shares / number of coins (or something else).
- There is not much difference between the model that Terra used here and the model of most fiat currencies (although in banking, the funds are insured and that is a big difference).
- Hard currency is better than fiat in that it is actually backed. It is true that the fed backs currency, and that our currency is the currency of the international monetary fund, but even the fed uses dollars, or derivatives of dollars, to partially back up the very dollars they release (which is completely crazy). Our only saving grace is that the US still holds the largest gold reserve, but even it most likely would not have been enough if a similar situation that happened to LUNA / UST was scaled up and attempted on a country wide level or against the NATO states and the international monetary fund. That is why the fed constantly manipulates the fiat system to attempt to keep it in close enough balance, even if it means they devalue money (sadly). The point though for this situation is that the LUNA / UST project was not much different than fiat monetary policy, although it was obviously overextended and did not back the stablecoin with enough reserve value and restrictions to selling under pressure.
- There is an obligation to those who were sold LUNA / UST as a savings account (that one is a legal liability that I am pretty sure that if you do not recover from will have some serious legal implications - possibly even for governance members, but particularly for the day to day leaders of the DAO governance project).
- The course was not fundamentally flawed (or at least were no more flawed than fiat monetary policy), but certain specifics mentioned above were (and currently are - and there may be others that I have not mentioned or thought of besides these I admit, but as I see it, these mentioned above are the central ones). The problem now is whether either the current team will re-engage, or the DAO Governance members will take leadership and relieve the current day-to-day team, and place a new day-to-day team in place to re-engage. No amount of rebranding is going to be any easier than just working through this - and it will come with much less legal complications and responsibilities in the near future.
Putting this thing back together is completely doable at this point - without even having further outside funding (you have 5B in assets between the two tokens, and whatever may not be loaned out from reserves), but rather working over the next number of months to minimize the pool sizes, regain trust by restoring the value of the assets (both using the current assets and minimizing the pool sizes of those assets, as well as bringing in new purchases). If you happen to get further outside help - fine. But, you have what you need financial now to do this, and although it will recover on a smaller scale and most likely slower than most would like, it is more than doable. You have a fiduciary legal responsibility to do this from what I am seeing (although I do admit that I am only seeing as an observer and not from the day-to-day leadership team, or those who have been closely tied to the DAO governance since the beginning).
The idea here is to shrink things down to their actual monetary size, and then move from there toward new growth - it still is going to be larger than most other decentralized stable coin projects.
If I were to list the threads that seem most promising at this point they would be:
- agora[dot]terra[dot]money/t/8-steps-to-save-luna-now-economic-refactoring-proposal-from-industry-professionals/7510
- In regards to the points I mentioned above that are similar
- agora[dot]terra[dot]money/t/buy-back-and-burn-luna/10946
- In regards to shrinking the pool sizes (although I disagree about UST being dead - at this point they are just diluted pools that need to shrink through equity [purchasing through minting and burning and purchasing through buy backs and either hold in reserve or burn after purchase]). But, minting and burning should not just happen in a way that violates monetary buying power under the token assets - you can’t just burn without purchasing it first, that is essentially devaluing the whole system monetarily, and then you do hit the point of being counter productive and driving away any remaining value.
- Proposal 1164 or 1169
- Only as temporary solutions to allow the minting purchasing of UST and burning sale of UST to shrink the pool and provide a smaller supply to enable a larger demand. On a permanent level, these should be based on volume of trade, and that trade should be the UST to LUNA (and vice versa) on the Terra chain. Do not worry about arbitrage on the exchanges, you can apply a volume control of exchange on your own block chain for when sales / exchanges are too much volume that could create a run and quick loss of confidence - you can slow these down to a reasonable pace on your own block chain (let traders on the exchanges do what they would like).
- agora[dot]terra[dot]money/t/terra-ecosystem-revival-plan/8701
- I would completely disagree, but I can sympathize with how difficult this must be for @dokwon both as someone who is probably very tired right now after this week, and someone who is watching a good portion of the work he has done feel lost as people continue to say it’s over.
I would post these points, but my LUNA was purchased wrapped and is not on the chain. Feel free if there is anything in here that is useful, refine it into specific and succinct points, and put it on the governance section as a new proposal.
I hope that helps a little bit.