USTC Revitalisation and Incremental Peg to $1 through the implementation of a Peg Divergence Tax on Transactions both on and off chain

BRAVO…
NICE WORK
put on proposal ASAP.

i think first it should be implement on dex.
which help increse on chain activity. alongside 0.2 percent burn mechanism work more actively.

@Doraemon So for this to work it has to be applied everywhere USTC is traded. If we apply it say for instance just to a DEX onchain. It would drive people to trade elsewhere

“This approach should appeal to both USTC and LUNC holders alike and allow us to slowly but safely collateralise USTC with BUSD. It also doesn’t require any minting, funds from the Oracle/Community Pools or an external liquidity provider so there shouldn’t be any major initial negative price action.”
Convincing argument made by this, if it outweighs the negatives:
"* Most likely will have a dramatic reduction on trading levels below peg.

  • If the markets react badly and without and current onchain utilities to drive demand it could result in stale/no trading.
  • If there isn’t sufficient demand at/above peg and you need to sell you will be taxed quite aggressively offramping."

I am for

Redline,

Good write up to solve a hard problem with a strait forward solution. Everything sounds reasonably achievable. I’m not expert on arbitrage or the economics of on chain activity but this marginal tax, again sounds like a strait forward solution.

As to Rabbi points.

  1. There is plenty of capital to be had, just a matter of sourcing it - I do see this as viable objection
  2. Is not possible though governance to pass a proposal to force the removal of USTC from CEXs that don’t comply?
  3. This is a non specific objection, however with consideration I would say additional security measures is only a matter of further brainstorming of implantation development.

It would be good to see this concept floated to other active USTC projects for consideration either in whole or as a part of the greater re peg objective.

Nice work.

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How to force off-chain? we saw what happened with Lunc tax. Do you have a plan B? Anyway, thank you very much, for all the time dedicated to the study, I know it’s not easy, congratulations!

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@RedlineDrifter I was about to present a project to buy back via the CEX API, but I thought to Lunc, because he will need to buy back both USTC and LUNC to be able to SWAP LUNC->USTC or USTC->LUNC this would increase our liquidity pool and burn so much lunc as USTC, without the need for coinage. Now I believe it will work, congratulations on your project, the only way is to buy back the tokens, I thought I could use the 50% of the community pool for buybacks, because in the past we approved a vote that 50% was for burns and however it fell in oblivion, instead of burning everything, it could be used to buy back and send to the liquidity pool. now the L1 team needs to take a stand on the bug that caused all the chaos, and so that it doesn’t happen again. we want the chain to flow naturally, we need to leave the swap as it was before, I believe there are already scripts that could be swapped, to be able to erase the origin token and switch to the destination token. I’m really glad someone did it in a way that doesn’t interfere with the chain and that the repeg and burn happen naturally over time. For me you killed the charade! Again, congratulations, you did an excellent job.

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As to naughty CEX compliance - Classic government proposals hold no enforcable value.

ABOUT PHASE 2) in your example 0.011 out of 0.99 is 1.11% of the total, the tax discourages selling below the peg, but doing so I don’t know if it encourages a buyer to buy something that he sees falling in price, in addition to the capital loss, he also has to pay a tax, and if there is panic in the markets, I don’t think people under pressure will face too many accounts.
ABOUT PHASE 3) the idea of the pool is good, but it could be the victim of an attack and be emptied, it must be constantly deep to ensure exchanges of each entity, it could be a way to decrease problems but far from being a solution
ABOUT PHASE 4) if the protocol does not take charge of the buyer of last resort, a drop in demand there is no tax or speculator who cares.
That is, to ensure that UST maintains the PEG in all circumstances, only the extreme ones must be considered. If demand for UST starts growing again and suddenly someone wants to get rid of 25% of the supply without crashing lunc they need to be able to do so in order for it to be a stable system (and I’m intentionally using grossly huge numbers).
wanting to draw a parallel with the banks, they use the money from the deposits which they then loan out but if the account holders all at once ask to withdraw all at once then the bank jumps upside down, if the same amount would have been taken over the years, maybe it would have held up. I don’t think a protocol can afford a similar situation, in which a momentary lack of demand causes the protocol to sink under the weight of the offer. There is no tax that holds. Imagine that Silicon Valley bank account holders were told that they had to pay 1% to withdraw, would that have stopped the account holders from escaping?
To make the excess supply disappear and guarantee a 1ust=1dollar ratio, the pool could be a good idea but it is not sufficient
the buyer of last resort protocol might be a good idea but not sufficient.
both things at the same time could guarantee fewer problems but still could not be sufficient for all scenarios. (the fund may run out, there may be two emergency situations in a short time, and the fund created to protect the peg may not have enough funds)
The price of gas could be raised specifically to discourage movements in dangerous situations of the protocol, it could be forbidden to trade beyond a pre-established number of ust per day per portfolio (and I don’t think it could be a particular obstacle to a premeditated attack) or in total , but these restrictions don’t sit well with an open market and could discourage large investors from taking part, if they risk not being able to transact if the protocol fails or not being able to convert their funds if a deadline is exceeded. certain amount.
It being understood that without a use lunc and ust have no sense of existing, does not mean that a momentary shock of demand should be able to bring down the protocol.
the introduction of a third component that takes on the burden of this risk, compensated proportionally for the risks it runs, is an excellent solution for two reasons:

  • lunc is protected against hyperinflation
  • this could drive volume and interest in the chain and people would buy lunc more willingly

The question that arises is who would want to buy this third coin that takes on such risks?
first of all, the stability of lunc in this case would make it possible to invent in favor of the third currency of the protocol. in turn making the mechanism more and more stable.
furthermore, the right to rewards must be guaranteed to those who block these tokens. the rewards can be commissions on arbitrage and swaps between the stables of the land ecosystem. That would be a real yield and therefore makes everything sustainable. Beyond the possibility of being able to introduce this currency as a gas currency. Lunc has to sacrifice some of its utility and give it to a third currency to take the brunt of a sudden demand shock to UST, and the holders of this currency must be highly rewarded for this risk.

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