Since the Community DEX Design diagram wasn’t uploaded properly, I am reuploading that again here:
The rest of the proposal which I wasn’t able to post earlier is attached below:
Timeline
It will require approximately 6 Months to develop the complete repeg system which involves developing and issuing a new stablecoin $INRT on the Terra Luna Classic ecosystem and enabling buy/trade/swap functionality for $INRT using only $USTC.
Budget
I require a supply of depegged stablecoins from the Community Pool for my work so that I can use those coins to work on how I can gradually bring them back into the system like $USTC, and enable buying $INRT stablecoins using the other stablecoins which had been depegged in the crash.
For the complete project of 6 months, I would request the community to provide me with the following funding:
For the $USTC Pool - 2,000,000 $USTC (approx. $ 40,000 USD) — will be completely invested to issue and convert into new $INRT coins
For 6 months of L1 and L2 development work - 1,000,000 $USTC (approx. $ 20,000 USD)
Total Investment requested - 3,000,000 $USTC (approx. $ 60,000 USD)
Team
I, Arunaday Basu, am currently the sole developer of this project. If it is required to take additional help for the project, I will take the help on my own salary and the community does not need to pay anything additionally apart from what has been mentioned in the Budget.
You can find an introduction to me here, and here and the following is a brief description of my professional experience along with my social/public profile links:
I am primarily a full-stack JavaScript developer and MERN (MongoDB, Express, React, Node) is the stack that I generally prefer to work on. I have almost 13 years of development experience in various languages, stacks and CMS. I am professionally a business owner and I have a Bachelor of Engineering degree in Computer Science and Technology I have been involved with various startups and I have been employed in a company (MyGlamm) which is a unicorn startup company now. I have also worked on a blockchain project on EOS (MediPedia), as a React developer and then with one of the best advertising agencies in my country (Zero Budget Agency), in various positions, from development to strategic marketing. After that, for the last 3 years, I have been managing my family business of over 26 years in electronics & electricals, miners and other equipment and continuing to work on my own coding projects. I am a resident of India, and apart from coding, I am passionate about trading on the cryptocurrency market, mining, history and art.
You will be able to find my current projects on GitHub and as you will notice, I have already been contributing to the Rebel Station wallet for Terra Luna Classic. You will further notice in my GitHub repo that I am working on a wallet for the new blockchain called Archway.
All that I am sharing with you are either past projects that I have worked on or side projects that I am working on currently.
LINKS TO MY PROFILES:
LinkedIn: https://www.linkedin.com/in/arunaday
GitHub: arunadaybasu (Arunaday Basu) · GitHub
Twitter: https://twitter.com/klothtweets
PROPOSALS ALREADY IN DISCUSSION:
Frequently Asked Questions (FAQs)
Qn: Is this a “$USTC to $1 USD” plan?
Both yes and no.
Since$USTC is a depegged stablecoin, the status of $USTC is currently similar to any other cryptocurrency without reserves.
The disadvantage of this is that it cannot be used in lieu of a dollar, but the advantage is that $USTC is not restricted to the price point of $1 USD anymore: it may exceed $1 in value as well if enough supply is burnt.
- What I am providing in this plan is a way to burn $USTC and convert it to a stablecoin
This will provide traders and exchanges with arbitrage and trading opportunities in $USTC. They will be able to invest and make money from their investment. They may even choose to margin trade or invest in futures of $USTC. They are not restricted anymore to how a stablecoin functions.
Qn: Is this proposal an alternative or replacement to Redline’s or Duncan’s proposals?
I have mentioned at the end of my proposal that I do not wish to be the only one working on repegging $USTC.
This is not a proposal that intends to replace the other proposals by Duncan and RedlineDrifter.
If they wish to pursue their proposed ideas and/or also work on Do Kwon’s original arbitrage function that is defunct currently, then they are free to do so.
It is not something that I can, or wish to take up, since it is too risky and I would rather go for a $DAI or $SILK type of model in which we create reserves made of a basket of cryptocurrencies.
I will not attempt any complicated algorithms to support the peg cause as it is not required to do so: $BTC and $ETH together are sufficient to hold the peg and create the required reserves.
Qn: Are you planning to work on the Market Swap (AKA Atomic Swaps) core L1 module?
It would be a much better idea for the L1 Joint Force Team (currently represented by LUNCBurnArmy as the project manager) along with a Quant to take up as a part of their work.
Duncan has already suggested a method in which it can be done, and he has published a whitepaper on it too. I would highly recommend the community to refer to that.
I will be introducing a completely novel method of swaps between the depegged currencies: wrapped stable tokens on the Terra Luna Classic ecosystem for trading between pairs.
Wrapped Stable Tokens (WSTs) will enable arbitrage opportunities between different currencies and will attempt to emulate the original design of the Terra-Luna ecosystem in which crypto forex traders could profit from arbitrage trading.
Qn: How are you planning to defend the peg of $INRT during a market crash or during a deflation of reserve value?
- My target investment for the $INRT token launch (ICO) is $ 10 million USD, not $ 40,000
I require this $ 40,000 in a $USTC Pool to get that $ 10 million from the investors because without a genesis block with the correct token amount, the token itself can’t be launched/verified on the Terra Luna Classic mainnet.
There is no particular reason why I chose this figure of $ 40,000. Anything lesser than that won’t be enough to convince investors to put in their money as well into the coin, which is why I have asked for $ 40,000 from the community, which should be a substantial amount in INR (I shall explain later why this is important) to convince investors.
Initially, the complete $ 10 million will be converted into $BTC+$ETH reserves. It is not required to use the $USTC liquidity pool from retail users (the invested $ 40,000).
During a market crash, we will liquidate the value that we hold in $BTC+$ETH (which would have already made profits and increased in value by then) and fund the $USTC Pool so that the TVL of the $USTC Pool remains constant even during a market crash.
Now the question is what will happen if $BTC + $ETH crash together: I have chosen the combination of $BTC and $ETH specifically because it is highly unlikely that both will crash together. Generally, whales shift money from $BTC to $ETH when they see the value of $BTC falling and vice versa.
Let’s consider that it is does crash and $BTC + $ETH fall to 20% below invested value. The result of this will be that 1 $INRT will go below peg.
There is no issue if it does actually, because we are still holding the same amount of BTC + ETH in our reserves. Say, it takes 1 month to recover from the lowest point of $BTC + $ETH and come back up again to the invested value.
During that time, because of the arbitrage opportunity, there will be more buyers for $INRT. Not less. So, we will make more money, not less.
- Holding reserves in $BTC and $ETH is much safer than holding reserves in fiat which is subjected to inconsistent tax changes and interest rate hikes which could potentially cause a stablecoin to depeg momentarily
A case study is what happened during the $DAI depeg/crash. It repegged (during a weekend!) because they were still holding their reserves in the exact same denomination.
$BTC and $ETH will stay as $BTC and $ETH in our reserves. Theoretically, only the value is changing for these coins on a daily basis, so when it falls, it goes slightly below peg and when it profits, it goes slightly above peg.
That’s absolutely normal. That’s how most stable coins operate.
How is $DAI backed?
For example, $DAI is held completely in crypto and its value fell/crashed during the $USDC depeg. Nothing happened. Absolutely nothing. Some people didn’t even get to know that it depegged and then repegged again. Both $USDC and $DAI did that in less than 48 hours.
This is because they were still holding the exact same number of coins. It’s just the value of those coins had crashed. That could happen temporarily. That’s not an issue with a large number of investors invested into a stablecoin.
Qn: Why did you choose to peg a stablecoin to the Indian Rupee over the US Dollar/Euro/Yen ?
Although there are many reasons (including the de-dollarization movement which is catching up with the trading industry), the primary reason for choosing the Indian Rupee is that $INRT is a direct competitor to centralized CBDCs which have already been launched in India.
The Rupee is 64% above the current value of $USTC. It is much easier to peg something with +64% margin than say -98% margin (like in the case of $USD ↔️ $USTC).
The Central Bank is targeting 1 million users in 3 months. This is how many people live in India.
- The entire target base of CBDCs is also the target base of a decentralized alternative to CBDCs
If we are in time for the market, then we will not only be a competitor to CBDCs, but also a strong competitor to fiat-backed stablecoin $USDC which is being introduced into the Cosmos ecosystem.
Qn: If $USTC can’t be pegged to exactly $1, how do we issue our own stablecoin pegged to $1?
That is quite simple actually and the process begins by issuing a stablecoin like $INRT.
Once you have bought/swapped for $ 1 USD worth of $INRT, you can exchange that for $ 1 USD worth of Wrapped $USTC.
Wrapped $USTC can be issued very easily cause we already have a stablecoin.
$ 1 USD = ₹ 82 INR
and
₹ 1 INR = 1 $INRT
So, we can issue a coin called Wrapped $USTC in which,
1 Wrapped $USTC = $ 1 USD = ₹ 82 INR = 82 $INRT
Similarly, we can also issue stable coins for any other country/currency combination in the world, like Wrapped Yen, Wrapped Euro, Wrapped Renminbi and so on.
Qn: This is a $USTC repeg plan. What about $LUNC?
Most $LUNC holders are also $USTC holders. Before the de-peg, traders had access to both currencies and after the de-peg, $USTC was partitioned to the Terra Luna Classic ecosystem because of the possible liabilities associated to the financial losses due to the de-peg.
Thus, a $USTC repeg also means good news for $LUNC since it is a coin which currently belongs to the community owned version of Terra Luna - Terra Luna Classic, and maintained on the same LUNC blockchain, so if $USTC increases in value, then the Total Value Locked in the Terra Luna Classic ecosystem also increases, giving us access to more liquidity, more dApps and more returns from investments.
Qn: Have you checked the rules, regulations and related compliances which are needed to be completed in order to launch a stablecoin?
The Terra Luna Classic community is currently not registered in any jurisdiction in the world (as far as I am aware of), which means that no one person or entity owns the Terra Luna Classic ecosystem/blockchain.
This is a decentralized ecosystem and we are launching a decentralized stable coin on a blockchain-based technology. The objective is to create a trustless payment ecosystem which can be used by everyone regardless of borders, legalities and restrictions. Issuing a stablecoin is central to the idea of such a decentralized ecosystem of currencies which can be used for everyday payments by anyone in the world.
I would not, as a developer, like my technology to be centralized now, or any time in the future. If the community chooses to do so, they may pass a vote after 6 months and decide whether they wish to register the stablecoin of the system ($INRT in this case) legally with the financial authorities of a particular jurisdiction. However, the community may not do so during the first 6 months of development during which time I will be building the stablecoin ecosystem.
Qn: Why are you using $BTC + $ETH to create reserves and not fiat?
This follows from the previous answer since it does not require a KYC or complicated registrations to create reserves in $BTC + $ETH. We do not require a bank account or company documents to own a programmatically controlled transparent account with reserves for any currency that we want.
Recent bank collapses have proven the volatility of fiat reserves and if $USDC had kept their reserves in cryptocurrency, they would not have to face what they are facing today: banks which hold their reserves are closing down and causing $USDC to de-peg multiple times because their reserves are held in fiat in a bank account.
Qn: What will happen if you are not available to work for some reason?
Since this is a project by the Terra Luna Classic community and I represent the LUNC Community, in case of my absence from work for unavoidable circumstances, the community may pass a vote to hand over the work to other developers of the LUNC ecosystem.
I will publish my work to GitHub and make it open source so that other developers may contribute and in case of my absence, the repository may be forked and the work can be continued without my intervention as well.
Qn: What is the investment required after 6 months?
Nothing. The investment that the community is making currently for this proposal is a one-time investment and it is my responsibility to bring capital investment into $USTC, $INRT and the other stablecoins on the Terra Luna Classic ecosystem.
Apart from development being a primary job during the next 6 months of engagement with the community, I shall also engage in investment/funding opportunities and a major token launch which should not only be sufficient to see me through after 6 months, it should also be sufficient to re-distribute this investment back to the community as rewards in the near future.
Notes
The community has, till now, invested close to $ 300,000 USD on L1 & L2 development and is about to invest close to $ 40,000 more on L2 development. Next quarter, the community will need to invest close to $ 120,000 USD more to fund the L1 Team which continues to struggle at it’s work for almost ONE ENTIRE YEAR now. The results we have to show for $ 300,000 USD investment till now, are shameful, to say the least. I will go as far as to say that it was a direct breach of community trust with money that was taken from the Community Pool.
There is absolutely NO ONE and NOTHING that is working on developing a solution which re-funds the Oracle and Community Pool(s) of Terra Luna Classic directly. This repeg plan might be the ONLY way to re-fund the Community Pool considering that other developers are not even bothered about the near-empty Community Pool from which they are withdrawing their salaries. I do not think they understand that there is no more money for Quarter 3 of L1 development work after Rebel Station is funded. Other considerate members of the community have forcefully passed proposals to reduce the funding of the Community Pool. A complete disaster is about to take place in less than 6 months if we do not fund a plan, with the little money we have remaining, that directly sends money to the Oracle and Community Pool(s).
This proposal is a culmination of many ideas from the number of discussions I have read on this particular topic of a possible $USTC Repeg (including Ziggy), but the reason I am proposing this is because I will be the primary developer and project manager handling this entire plan. I will not be working with the L1 Development for this work since it is not required to do so according to the plan. Also, L1 Development is slow, so I do not wish to depend upon their development to achieve goals of the community.
Having said that, I understand that Duncan’s proposal (Ziggy) is in discussion and I have recommend him to work with the L1 Team. I have kept that in mind and this proposal does not interfere with his proposed $USTC Repeg plan since I will not require L1 Development to be done for my plan, so both plans can work independent of each other and yet try to achieve the same goal of $USTC Repeg.
This plan also does not compete against Redline Drifter’s $USTC Repeg plan which implements a Divergence Tax fee, which has passed governance at the time of writing this document. Even if the divergence tax is implemented, $USTC would still be useful for trading $INRT and thus, other wrapped stable tokens in the system. Redline’s proposal will, in fact, act like an additional safety measure above and over this plan’s buffer and reserve system to protect $INRT investments.
Addendum to Notes
Although this proposal began primarily as a $USTC Repeg Plan, it has now developed into what I can safely call a Terra Luna Classic Technical Recovery Plan using a methodological high-level technical design and architecture which makes the blockchain useful again for payments, arbitrage/trading opportunities as well as for long-term holders of $LUNC who wish to see their holdings profit from reducing the supply substantially over the next 1-2 years and not 87 years (as calculated using the current burn rate which has reduced further after this calculation was done).
I took some time to not only expand this proposal further, but also went and checked whether implementing the ideas described in this proposal are possible to be implemented technically or not. I created a test coin on the Cosmos testnet, transferred it between wallets, created CW20 wrapped tokens on Terra Luna Classic and transferred them between wallets. I can safely conclude that executing this proposal is possible, though the time required to complete the community dex along with the rest of the plan would extend the timeline by 2-3 months. This is unavoidable and I wish to devote more time into security and safety checks on the dex before it is made public. The community dex might be one of the most important components of this plan and coding it properly by taking more time will only benefit the community.
Thanks for reading this till the end.
DECLARATION
If this proposal is passed by the community, I will provide the community with a Stamp Paper issued by the local Sessions Court in my local jurisdiction in which it shall be notarized/attested by a Magistrate/Corporator that my employment with the Terra Luna Classic community shall last for 6 months during which time I shall be employed full-time with the community, and that the community has the right to terminate my employment with the community at any time by passing a vote in governance. This document shall be made available to ALL members of the community.
DISCLAIMER
No part of this document should be used as financial advice and cryptocurrency investments are subject to market risks.