Introduction
During the 2nd quarter, following the completion of the Cosmwasm upgrade to parity, the L1 Task Force proposes utilizing a small portion of the Q2 compute budget to set up a USTC test environment for the L1 team. This should be possible to complete without any impact on currently scheduled activities. We feel that having community authorization to focus on building the infrastructure required to test proposed approaches to a USTC repeg would be of significant benefit to the Luna Classic ecosystem.
This proposal seeks the authorization and use of already provisioned compute budget for the purposes of establishing a test environment specifically geared toward testing USTC repeg ideas. As a result, this proposal is a text proposal, and no additional community spend is required currently. It should be noted that only compute budget would be allocated for this item.
If renewed for Q3, a large component of the L1 Task Forceās activities would likely be focused on USTC development. This is based primarily on the feedback obtained from the Community Oversight Committee regarding the top development priorities identified by the community, as well as the logical next steps to better restore the ecosystem and enhance the process of achieving the stated goals of USTC revitalization and Luna Classic supply reduction.
Future uses (following the completion of Q2 deliverables and onwards) for the USTC test environment could include, but are not limited to:
Recreating a simulation of the depeg event:
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Identifying possible capital controls that could have prevented the ādeath spiralā following the USTC depeg (e.g., capping maximum supply).
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Leaving the mint/burn mechanism in place and placing a cap on maximum supply.
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Conducting a series of transactions to confirm the behavior of Luna Classic and USTC mint/burn behavior. Collecting, documenting, and analyzing data.
Creating a simulated repeg event:
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With the market module re-enabled, creating āperfect worldā conditions to simulate a repeg to $1 USD (e.g., 1 year to achieve $1 repeg). Determining the required transaction volume and ideal mechanism.
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Building upon proposals already suggested, conducting a gradual incremental repeg to $1 USD:
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Using a tax divergence strategy (developing a proof of concept for Redline Drifterās proposal that passed governance).
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Using a volume-based strategy with a deflationary fee applied (simulating on-chain volume for USTC).
Testing proposed strategies for maintaining USTC peg:
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Stress-testing new ideas suggested for maintaining a USTC peg to obtain efficacy data.
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Investigating possible USTC incentives:
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Reviewing how the Oracle module is currently funded and ensuring future staking sustainability while simultaneously investigating USTC staking options.
Acceptance Criteria
A new on-demand test environment for use by the L1 team, analysts, and other developers within the community is created for USTC.
While there has been much discussion related to USTC, there has not been a significant amount of work completed in terms of real-world development or testing. As ongoing discussions with central exchanges are currently taking place regarding USTC, the L1 Task Force anticipates that a large component of their work in Q3 could be geared toward USTC development.
Consequence of a YES vote
If we vote YES on this proposal, the L1 Task Force will be authorized to utilize existing compute budget funding toward creating a USTC test environment.
Consequence of a NO vote
If we vote NO on this proposal, the L1 Task Force will not proceed with the creation of a USTC-specific test environment.