USTC Re-Peg Proposal: "Ziggurat" (Discussion #2)

The idea of an ArbitrageModifier to manipulate exchange rate on chain is certainly innovate and, in the context of an unsecured, synthetic capital, has the potential to positively impact price action…

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This proposal will harm LUNC to benefit USTC by your own admission. Any path forward should benefit both coins.

“Who’s ready to spend or raise $225k?”

The community pool exists for this purpose. There are other threads discussing how to better capitalize the CP right now.

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The below is a long winded opinion based on what would be needed before a Re-Peg. The math used is a guess based on some current numbers and the rest on speculative estimates.

Although not technical enough to fully comprehend the risks, I’m assuming that at the starting point of a potential re-peg, it would be in the interests of the LUNC Blockchain & community for the supply to be as low as possible, which of course is true everyday without a re-peg. Could we not help this along by having a “Start Date” for Re-Peg say 7 months from proposal date. In the 1st 6 months commit to burning every LUNC coin possible through the following means(Calculation doesn’t include USTC):

  1. Raise Burn Tax to a minimum of 1.2% or higher depending on viability. 350M/Day.
  2. Increase in activity due to awareness. (Possible extra 350M/Day).
  3. Burn 100B LUNC in ORACLE POOL. 550M/Day. Need O/P re-funding mechanism.
  4. Validators all raise their Commission to 5% & Burn. 20M/Day.
  5. Tax Delegator Rewards at 20% & Burn. 60M/Day.
  6. Binance Burns continue when they see our sacrifice. 200M/Day.
  7. Binance Burns Increase due to awareness. (Possible extra 200M/Day).
  8. Burns from Influencer Videos. 10M/Day.
  9. Burns from Community Pool. 5M/Day.
  10. Burns from LUNCBLAZE & BURNALOT. 2M/Day.
  11. Burns from NFT Staking.(HCC) 3M/Day.
  12. Burns from Lunatics. 3m/Day.
  13. Burns from turning Giveaways & Promotions into Burns. 2M/Day.
  14. Burns by Community 26 Burn days Once Per week. .5% of 3B 15M/Day.
  15. Burns by generous community members. 1M/Day.
  16. Burns from all other Utility/Off Chain burning etc. 5M/Day.
  17. Burns from increasing gas fees. Divert to Burns & Funding C/P & O/P. 3M/Day.

Reality: The LUNC/USTC Blockchain is in massive debt especially as it relates to a $1 Re-Peg. When you’re in debt you need to make enormous sacrifices to get to Par. We cannot expect that we will be able to keep our current positions and reduce the number of Coins. For instance if you hold 50 Million Coins now and in 6 months you held 35-40 Million coins, but LUNC was trading at .0008 wouldn’t you be farther ahead? Of course. $8,000 Versus $32,000.

We don’t need pie in the sky dreams, we need proper Perspective: Assume we are in a Bankruptcy Protection recovery because of massive debt. And you’re an impartial court appointed trustee, would you allow any charity or bonus rewards? NO! So let’s get real here. The coins are not going to magically disappear. We have to give up something. We can’t expect to massively profit quickly while others have been seriously hurt.(Capitulation) By making sacrifice now we burn between 1.23 Billion Coins/Day to 1.8 Billion Coins/Day with the wildcard being the market reaction to seeing us really burning coins, which could in theory really cause true hyper deflation because of increased burns.(Imagine $2 Billion Volume/Day) Some of the above measures might be able to be enacted through governance. Finally the elephant burn in the room, Binance who hold maybe 1.5T. Could we convince them to burn an additional 500 Billion or 1T coins if we do the above or close to it? Who knows. But it would be in their interests. Additionally I personally don’t believe that it is in our interests to have Binance hold any more than 10% of the supply. In the meantime developers continue to fix(With something like this a lot of fixes would be needed) & build for future. Building is necessary long term but is not going to result in “massive burns”. We need to be honest & humble on this reality and for the short term not think of how much $ we could make.

Under this rosy scenario we might have burned 1 Trillion coins. In 6 months Circulation is now 4.7T with 1.1T staked. After the 6 month period the community decides in month 7 whether or not to embrace some sort of a REVERSE SPLIT or continue doing what we are doing. If we go REVERSE SPLIT we do a 5 to 1. (Total Supply 1.16T) With an option in 6 months to do another split of 5 To 1 resulting in a total supply of 200 Billion or less. In This scenario you would have 8M/1.6M coins respectively. But the price could easily be 50 cents. So your 1.6 Million coins could be worth $800K versus $8000 now. $100 Million MCAP.

Let’s embrace the reality that for a Re-Peg to work we need to reduce the distance from where we are now in Supply to as close as possible to 10 Billion coins which is the goal. In this scenario about 200 Billion. We also have to obtain through governance a no minting/re-minting guarantee until we reach 10 Billion. But I maintain that we will never need to Mint if we don’t give in to increasing the $ supply like central banks. Creative means to fund the C/P will always be at our disposal with smart people putting their minds to work on it, such as the gas fee increase that Ed K discussed a few days ago and Binance grants etc. Once $10 Billion Coins is hit we need to continue to be a deflationary coin by burning the supply to 1 Billion or lower. Why? It will be a partial security against bad actors bent on Shorting everything.

You want to be number 1? The above is a rough road map laced with speculation and a dose of reality.

The bonus: 1. Those that lost so much in the capitulation have a real chance to recover. 2. Community Validators who have in large part sacrificed so much already for the community will be able to finally make real $ for their efforts for playing a major role in bringing back LUNC to Number one. 3. Everyone wins except bad actors like shorts who are not destroyers not builders.

Re-Peg is actually closer than many believe but we need to be realistic 10,000 + current holders of 10 Million or more coins are not going to be able to continue to hold the same amount if we can get the circulation down to the initial target of 200 Billion. Do the math, embrace it and get ready to make sacrifice for the good of the BC.

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IMO, we Have to wait until the new legal regulations on cryptocurrencies - thus also on stablecoins - come into force, or we risk damaging not only USTC, but also LUNC. Creating something that goes against the law, effectively results in de-lis-ting from exchanges.

LOL A pyramid is not really something I wanted to see here

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The USTC is literally the heart of LUNA, its not the LUNC itself, its USTC. Having USTC repeged should boost the confidence entire ecosystem, allowing things like Mirror protocol work properly again. That would be such an amazing feat

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Ok I re-read this part. As far as I understand now, you need to implement this first in order for you to collect this data so that you can implement the final product and then launch it?

This is a chicken and egg problem.

You need the chicken in order for you to get the egg. But in order for you get the chicken, we need to see the egg first.

To clarify, Nova is not required to make this operate, nor is any other DEX. The existing liquidity in AMM protocols are too thin to meet demand >1k USTC before you start hitting slippage. (in addition to your 0.30% swap fees)

More likely to see this encourage cross-market arbs: move USTC on-chain, start closing the arb while the premium is active, move USTC back to CEX and start closing the arb while discount is active.

Would like for you to focus more on the lever handler than the AMM.

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Well no this could be modelled and should be before we implement anything. Create a test net, create some arb bots. Let them rip and see what happens. In reality bots are going to make up most of the trading anyway.

This needs to be done BEFORE putting this to a vote so we can make an informed decision.

I personally think its going to drain the liquidity as its not really creating utility, but modelling will help prove or disprove the theory either way.

The proposal is going through Discussions right now. The 5th discussion part is the proposal itself, which will be 1) a text proposal (meaning there is nothing that will change if it passes), and 2) outline what you’ve asked me (will you give Duncan the green light to spend time developing test mockups for viability?)

I won’t ask for funds on this except for bonding LUNC to Onyx for a certain amount of time :slight_smile: meaning no community pool spends, just bond the LUNC for a month or so and then you keep your principal. It would seriously help.

@SwordDemon

Another opinion,should we use oracle pool to benefit the arbitrageurs?The refill of oracle pool can be done by tax or fees of the late come arbitrageurs.This mechanism is another kind of Anchor,but simple to apply.Just a opinion,FYI.

Yes, Oracle pool is filled by transaction fees. If you get more transactions on-chain, you get more in the oracle pool. It’s also filled by swap fees. Arbitrageurs are the core demographic of users on-chain. We have very few other user demographics here. (eg traders)

@Frankleo

Additionally I personally don’t believe that it is in our interests to have Binance hold any more than 10% of the supply.

The problem is not necessarily that they’re holding the supply, it’s that there’s no reason to move it. Creating a slight arbitrage which is in our favor (ie we determine the premium or discount first, “market-setting”) creates an automated lever which says, “hey! maybe it’s worth it to start moving the liquidity around no matter where it is!” (See: dithering, forex frontrunning on Terra) – the importance of being the price-setter for the oracle feed (and not everywhere else) is very important imo.

Agreed with you on the outline. Again, the proposal going up is going to be a text prop. I can include a roadmap.

@vedova

IMO, we Have to wait until the new legal regulations on cryptocurrencies - thus also on stablecoins - come into force, or we risk damaging not only USTC, but also LUNC. Creating something that goes against the law, effectively results in de-lis-ting from exchanges.

Terra stablecoins are against the law in the first place because they’re synthetic regional fiat currencies. We missed the boat on being law-compliant ages ago.

@Kool_Aid_Crypto

LOL A pyramid is not really something I wanted to see here

Ok, hear me out. We take this one cent at a time. Just like a stepped-pyramid.
Fgdkr-sacAEjlVT

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USTC isn’t a stablecoin it’s a decentralized coin.

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Fully in agreement here : repegging USTC will not generate value for LUNC without clear utility of USTC

Before the crash, utility was mostly generated (subsidised) by the earn rate in Anchor. Without a mechanism like Anchor that makes USTC desirable, I would not see the value of repegging to recover the billions of dollars of liability left by ustc.

The re-peg plan looks solid and reasonable, but it needs to be connected to ustc utility. Savings, forex, whatever, but something that makes ustc useful compared to the other stablecoins

Having said that, what is making terra classic different from other L1 is this connection with ustc, so your efforts are very appreciated

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Yes,that’s the substance of repeg.
Another extreme view,any financial circle based on the desire of future,it’s the motivation of financial growth.
So the desire is a important part of market adjustment mechanism.
How to activate the desire,is the key to startup the engine.
We need that engine starter.

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@ek826 @Zaradar Are you guys supporting this proposal?

Regards

Ricardo

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Buy Terra Classic with a dollar $1 from CEX.
Sell to DEX for $.9, then setting up an infinity grid of the higher price pulled from another CEX on the DEX “I lose 10%”. The funds bought and sold from the CEX would cause a burn tax of 0.2% via DEX.
$.02 to Oracle Pool
$.01 community pool
$.03 Burn
DEX resells for $1 to CEX
The percentage left after transfer costs is split among Oracle Pool, and interest to investor. DEX is supported by community pool.
The investor wins through the increase of Terra Classic value as an asset, Infinity grid (Idea from Kucoin, settles in USDT to buy more LUNC), and interest via arbitrage of the DEX/CEX. Pros/Cons of this idea?

A Wonderful proposal.

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We are not asking ourselves the right questions when it comes to a re-peg.

  • What is the use case for USTC or whatever else we might re-peg to? Arbitraging alone is a hollow use case.
  • How does the re-peg increase the price of lunc?

If we can’t answer these two basic questions, step by step, we are then going down a hill blind. Maybe we can’t answer these questions until we see more d’apps on the chain.

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Another dapp like Anchor is needed,otherwise the selling pressure of Lunc can’t be solved.

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I agree with you and I think we desperatly need dapps like Anchor… but It’s a quite good proposal.

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It is an interesting proposal and might work. I think we need more different solutions that will be combined and give a result. This could be one of them. Problem is that if I understand that right Lunc price will be heavily under pressure for time being.

What about if all Ustc distributed as a rewards to stakers would be burned until Ustc circulation supply hits 5b Ustc? That would help lower supply and help your idea achive goals faster.

Also LFG still holds 1.8b Ustc if I remember correctly… burning that would help a lot.

Multiple solutions with one cause… lower the supply and repeg it again as high as possible.

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I like the idea a lot but most of the community unfortunately won’t support it. It is what it is unfortunately…

I emphasize that once again.
Anyone who wants to touch the resources of the Oracle pool is a thief with a 99% chance.
If you really want to make the good chain, you’re going to try to improve chain’s profit structure. Every idea of robbing the chain’s safe itself is a person like TR.

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