People who held UST/aUST are not traders/investors. Most UST holders just used it as a safe alternative to a savings account. That is how it was marketed, not only by TFL/Do Kwon, but exchanges alike.
An example of such an ad: "High Yield, SAFE & Happy Earn.
To think that compensating them with Terra v2 with a 2 YEAR vesting schedule is acceptable, is absurd. These are not traders, investors or gamblers. They do not know how to trade/invest and didn’t opt for that. If they wanted to speculate they would have bought Luna and not UST.
Due to the nature of how this was marketed, “safe high yield savings account”, people used it as such. Most people don’t want to wait 2 years to get their money back. People have kids, debt, bills and responsibilities. They need and want liquid assets, USD…
I am exactly the person you describe in your analysis, I am not a trader or a gambler, I just put my savings in a system that promised a better return than traditional savings and without risk.
So I bought my USTs on Nexo with a promised return of 17% and normally stable!
From what I’m reading people will instantly sell their tokens as soon as they get them. Is this smart? Who know’s, UST holders aren’t speculators. They just want to recoup as much of their initial UST deposit as possible.
Why not skip the step? Why not give them the stables directly? What if they don’t recoup anything meaningful?
Seems like it’s just an extra step, extra complexity. Reimburse the UST stakers up until some amount. Don’t care how much. 1m, 500k, 50k… Something.
Its really not possible to pay out a compensation plan by distributing off chain tokens. In order to do that they would have to sell all UST and Luna and if they are doing that to bail on the platform and payout compensation, no one will buy it. Remember that tokens, whether UST or Luna are only worth what the market will pay for them.
A compensation plan of any kind is the end of the platform, because of course people will just sell whatever compensation they receive, the whole point is to recover value, that sell off will drive the price of UST and Luna to $0 almost instantly.
Also, small investors who were wiped out by the event should be really cautious about supporting a compensation plan. First of all, the majority of comp will go to the majority holders, thats a fact, they hold the majority of tokens, they also control the vote. But worse than that, they also control the distribution, how and when it occurs. This would allow them to sell out first, ensuring what ever value remains in the system goes to them. This means that whatever scraps are left for small investors are in the distribution are worthless by the time they get to sell.
The compensation plans are just an attempt by large holders to recover the remaining value, but make it seem like they are concerned for the small investors. The only way small investors recover lost value is through a long and hard rebuild of the platform that doesn’t remove value by paying out compensation. Basically doing what is necessary to make the platform viable in the long run and attracting new investment.
Best take on the situation so far IMO.
Also, my thought is that with the treasury drained so horribly, if they indeed start filling up the smallest accounts first, then the so-called ‘cap’ on the ‘refund’ will be truly minuscule, such as a few thousand dollars.