Terraform Labs CEO Do Kwon unveils plan to restore UST peg

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– Terraform Labs CEO Do Kwon has set out his plan of action to help the stablecoin TerraUSD (UST) return to its dollar peg.
– In a tweet thread on Wednesday, he acknowledged that the last 72 hours have been extremely tough for the Terra community and that he hopes he can help it to survive.
– Kwon recognized that the amount of capital trying to exit UST has resulted in a lot of selling of Luna, due to how the stablecoin mechanics work. This has resulted in a large price drop for Luna, which is down 85% today.
– To begin with, he is endorsing a community proposal that will increase the amount of Luna being minted per day by four times. This would enable more UST holders to cash out.
– Going forward, he said the stablecoin will be redesigned to be collateralized.
– The proposal to increase minting of Luna was put forward on Terra’s governance forum. So far 80 million Luna has voted in favor of it with not a single Luna being used to vote against.
– If adopted, this will allow traders to sell UST for Luna at a faster rate. Currently only so much UST can be sold per day, and the proposal states that this is causing Luna to be minted at a worse price, resulting in excess minting of UST.
– By increasing the amount of UST that can be swapped for Luna, it will increase the rate that investors can exit their UST positions through Luna. The theory is that while this might increase the amount of Luna minted in the short term, it might decrease it over a longer period of time and help to restore the peg to the dollar.

20220421 Do Kwon Terraform Labs CEO Do Kwon unveils plan to restore UST peg
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