USTC is almost naturally pegged at 0.01 USD
The motivation is to continue to foster the old network, seeing that luna 2.0 has no stable coin
With a fixed ratio of circulating supply and locked capital valued in BTC, there is no difference, and might even be better to be pegged at 0.01 than at 1 USD? all the new market cap going in would be used to buy BTC, to collateralize the peg
the first stage is to fixate the price, and at the moment that would be 102,500,000 /10.25B = 0.01 USD
at the start stage, there wouldn’t be any NEW circulating supply until all the supply in existence is backed by USTC circulating supply at 0.01 to 0.10 USD worth of BTC, so over-collateralization, to do that only 1.25B new cap would be necessary,
keep in mind that the market cap would remain fixed so investors would have to put only the original
amount of 0.01 USD in BTC to have 0.01 equivalent in USTC, it makes no difference to investors as the
price would remain the same at the moment of buying and the moment of selling, ***the standard 0.2% burn fees in LUNAC and upward demand would give the extra 1.25 Billion of new market cap, ***
So instead of burning USTC, we would use the 0.2% to store and use this upward demand in the vault for the overcollateralization using BTC.
When the point in time comes where the ratio of 0.01 USTC to 0.10 USD in BTC, the stage 2 would kick in
the treasury would have 1.25 billion dollars worth in BTC and this money would be used to defend the peg in the future, remember that in the first stage the market cap and the circulating supply would remain static(no need to defend anything)
the necessity of stage 2 is due to allow an increase in circulating supply due to new demand to use USTC as investors gain confidence in the coin again…
in the 2nd stage, the market cap and the circulating supply would be allowed to run but always maintaining the ratio of 0.01 and that means that all the new USTC minted would have a backing of 0.10 USD in BTC,
From the beginning, USTC would be over-collateralized to approximately 1:10 and any downward BTC movement would be irrelevant, the upward movements from new cycles would be positive for the treasury, and the downward pressure would not be enough to de-peg only if BTC collapses.
I think it’s a good idea and at this stage, it’s only possible because the impossible seemed to have happened… where is Do Kwon to implement it?