The arbitrage between lunc and ust wasn’t wrong, otherwise it wouldn’t have lasted more than a month. The problem occurs only in certain situations. That is, when the offer of UST is too much compared to a sudden lack of demand, causing a depeg that leads to the infinite minting of Lunc and the abandonment of the algorithmic stable coin that will no longer see enough buyers once the coin that guarantees the peg (lunc) is diluted too much. Lunc may have to potentially absorb the dollar equivalent of UST’s circulating amount and beyond the speculators, no one will ever want to buy what was supposed to be a stablecoin that has been seen to be worth fractions of a cent, which is why even once the supply will have contracted we will find ourselves as now, with UST which is worth cents and trillions of lunc. If demand returns for UST, perhaps we could be able to recontract the supply and bring it back to the pre-depeg quantity, but even if this were the case, who would want to be the holder of a currency that can see itself disproportionately diluted at any moment? Given that the stability of UST is given by supply and demand and we can only intervene on the second (on the first only if we have a fund for the defense of the peg, which may not be sufficient), and it is on the latter that we must concentrate . The only way to decrease the offer is through arbitrage and through the repurchase with our funds created for this purpose, OR we consider creating an additional coin on which to unload the weight of the possible minting that does not affect LUNC. This new token must have a role, even a rather important one and not simply the sacrificial victim.
This would allow the stability of LUNC in the event of a sudden drop in demand for USTs with many USTs in circulation, first of all preventing a potential attack on the governance and the dilution of the Holders of the pulsating currency of the ecosystem we are part of. Beyond this, even though Lunc would see the price drop in the case of a Depeg, it would still remain strong and we could support the collapse of the third currency (which I will call SUN) with Lunc (without excluding the possibility of having a fund for the defense of the peg and all other possible solutions). I speculated that SUN’s role could be as a gas token. but this is not enough. we could allow you to block your SUN to obtain a return given by the arbitrage commissions (paid in sun or in lunc or a mix between the two) and they could also receive the commissions, or part of the commissions, of trading between the various stablecoins of Earth. (if I have not understood correctly, I saw that duncan in his article on medium talked about the possibility of creating this kind of forex with land currencies: Medium -c14843f7ad1e : “That’s what the market module does. If you’re traveling to Europe and live in the US, you need to trade in the local currency. However, you don’t want to give up your LUNC. Instead, you trade USD (USTC ) to EUR (EUTC) and use that as a form of payment. The fees charged on trading (spread) go to LUNC stakers.”) only that the commissions would go to the SOLE stakers. In the event that there was a strong depeg on UST, LUNC would not be affected too much, thus allowing us to help the SOLE supply. Furthermore, a strong depeg would cause a lot of volume inside the chain, therefore the gas could first of all be burned (paid in SOLE) furthermore whoever decides to arbitrate between UST-SOLE could decide to STAKE their SOLE, decreasing the supply In circulation.
In summary SOLE holders assume the risk that demand for UST will decline, and are assured of arbitrage and swap fees between the stablecoins of the land ecosystem, at the same time this guarantees LUNC holders stability as they do not risk being diluted.
LUNC - GOVERNANCE, STAKE, MINT UST
UST- STABLECOIN,SUN MINING
SOLE-GAS TOKEN, (IF STAKED) GAIN ON ARBITRAGE AND SWAP FEES BETWEEN THE VARIOUS STABLECOINS OF THE TERRA ECOSYSTEM. (I DO NOT EXCLUDE THAT THE POSSIBILITY OF CREATING ARBITRATION ALSO BETWEEN SUN-LUNC MAY BE MADE)
all of this is hypothesized and does not want to be exhaustive, but rather, I would like it to be subject to revision and refinement, perhaps including the ideas of the options (perhaps the commissions of the latter could go to SOLE stakers?) or others of which I am not aware . POTENTIAL BENEFITS:
- LUNC HOLDERS WOULD NOT BE DILUTED
- WOULD BRING ATTENTION AND CAPITAL TO THE CHAIN
2A. THIS COULD INCREASE VOLUME ON BINANCE BY INCREASING BURN AND LUNC PRICE
2B. IT COULD GIVE THE TAX A WAY TO DO ITS JOB. YOU SHOULD CHOOSE HOW THIS TOKEN IS DISTRIBUTED: -AIRDROP (GIVED TO LUNC HOLDERS OR THOSE WHO CARRY OUT CERTAIN OPERATIONS IN THE CHAIN AS ON ARBITRUM) - PURCHASE THROUGH LUNC (BURNING THE LUNC) IN ANY CASE, WE WOULD SEE A GREATER INTEREST IN OUR ECOSYSTEM, BRINGING VOLUME AND EXPLOITING TO THE MAXIMUM THE SUPPORT OF BINANCE AND BEING ABLE TO BENEFIT HOLDERS. CREATING THE UTILITY I SEE SCREAMING LOUDLY ON TWITTER. POTENTIAL DISADVANTAGES:
1.LUNC WOULD NOT BE THE GAS TOKEN OF THE CHAIN (IN THIS VERSION CONCEIVED BY ME)
- POTENTIAL IMPACTS NOT CONSIDERED. I AM OPEN TO SUGGESTIONS, MODIFICATIONS AND COMMENTS. I KINDLY ASK TO TAKE INTO ACCOUNT THAT I AM NOT A TECHNICIAN, I DO NOT HAVE PROGRAMMING SKILLS AND I DON’T KNOW HOW FACTABLE THIS IS, I TRY TO BRING TO THE ATTENTION OF SOMEONE WHO HAS THE SKILLS FROM THIS POINT OF VIEW.
I HOPE THE READING WILL BE INTERESTING OR AT LEAST INSPIRATION FOR A SOLUTION THAT CAN BRING BENEFITS TO HOLDERS AND THE ECOSYSTEM AND THEN TO THE COMMUNITY. I HOPE IT WILL CONTRIBUTE TO IMPROVE THE IDEAS THAT ARE ALREADY OUTSTANDING. THANKS FOR THE ATTENTION.