The aim of this proposal is to provide a fairer solution for UST holders, as existing proposals for “recovering” LUNA and UST are undermining UST holders.
If we assume that LUNA-v2 would reach 5B market cap, and UST holders will receive 25% of 1B LUNA-v2 supply, it means that UST holders will receive ~10c value for each 1 UST. (250M LUNA-v2/ 11.8B UST * 5$ = 10.5c). And most of this sum will be locked for 2 years.
UST was being promoted by many entities as a stable coin with 1 USD peg and many UST holders expected this to last, thus not selling their UST. Thus, we deem UST holders as the official creditors of LUNA-v2 or any subsequent forks of the project.
This current proposal is not contradicting kwon’s proposal or other proposals, but is built on top of it with more impact on UST holders.
UST DAO Proposal:
To recover value for UST holders, ‘UST DAO’ needs to be constituted, so it could manage the ‘UST DAO Recovery Fund’. This fund will be distributing any recovered funds to the UST holders using FatMan’s proposal principles (small holders first)
UST DAO Recovery Fund will have the following sources:
Develop an industry-wide mechanism with participation of everyone to take fees from any for-profit transactions (like swaps) on operations with LUNA-v2 network on DEX, CEX and other DeFi services (see below). Suggested fee is 10% of the standard fee taken by the service.
Alternatively such fees could be built in into tokenomics of LUNA-v2
Voluntary donation program from the entities which profited from UST driven business, Market makers, exchanges, staking platforms etc. Ideally sum of all moneys generated from UST business stream.
Any winnings from the litigation efforts by the UST DAO legal services against entities which unfairly profited from the UST depeg and the following LUNA collapse (see below). As this can qualify as predatory actions targeted towards retail savings.
Maximum value of the fund is the sum of all received valid claims for the UST. Fund shall be managed by a regulated custodian and must adhere to strict spending policies. There needs to be a supervisory committee which will include all stakeholders, major exchanges, market makers, etc.
UST DAO would need to be represented by a real legal entity so it can implement points (1) and (3) of the proposal. It is possible to get recognized as a legal entity for the DAO if it is registered in Wyoming, Singapore and other jurisdictions.
Then UST DAO would be able to use legal/litigation services to pursue an official Creditor Status allowing it to pursue the collection of the due funds.
Litigation efforts would require some initial capital to formulate a case.
Proposal is to use the existing LFG Fund for initial capital formation. All funds which would not be required for legal services would be used as initial UST Reserves Funds formation.
If LFG Fund would not comply with this requirement, actually the first legal case could be made to obtain control of this fund.
Approximate amounts for the initial litigation efforts is hard to predict, but probably would be less than 2% of the LFG funds; and the rest would be directly used in UST Reserves Funds.