2/ I understand the last 72 hours have been extremely tough on all of you - know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this.
Together.
3/ First, if you donβt understand how Terraβs peg stabilization mechanism works, here is a good overview:
4/ A review of the current situation: UST is currently trading at 50 cents, a significant deviation from its intended peg at $1.
5/ The price stabilization mechanism is absorbing UST supply (over 10% of total supply), but the cost of absorbing so much stablecoins at the same time has stretched out the on-chain swap spread to 40%, and Luna price has diminished dramatically absorbing the arbs.
6/ Before anything else, the only path forward will be to absorb the stablecoin supply that wants to exit before $UST can start to repeg. There is no way around it.
We propose several remedial measures to aid the peg mechanism to absorb supply:
7/ First, we endorse the community proposal 1164 to Increase basepool from 50M to 100M SDR *) Decrease PoolRecoveryBlock from 36 to 18 This will increase minting capacity from $293M to ~$1200M. station.terra.money/proposal/1164
This should allow the system to absorb the UST more quickly.
9/ With the current on-chain spread, peg pressure, and UST burn rate, the supply overhang of UST (i.e., bad debt) should continue to decrease until parity is reached and spreads begin healing.
11/ Naturally, this is at a high cost to UST and LUNA holders, but we will continue to explore various options to bring in more exogenous capital to the ecosystem & reduce supply overhang on UST.
12/ As we begin to rebuild UST, we will adjust its mechanism to be collateralized.
13/ The Terra ecosystem is one of the most vibrant in the crypto industry, with hundreds of passionate teams building category defining applications within. As long as these builders, TFL among them, continue to build - we will come out of this together.
14/ Terraβs focus has always oriented itself around a long-term time horizon, and another setback this May, similar to last year, will not deter the #LUNAtics. Short-term stumbles do not define what you can accomplish.
Itβs how you respond that matters.
14/ Terraβs return to form will be a sight to behold.
Weβre here to stay. And weβre gonna keep making noise.π
β’ β’ β’
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1/ The LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market concerns around UST. Some more context on why and how:
2/ First, *LFG is not trying to exit its bitcoin position*.
The goal is to have this capital in the hands of a professional market maker such that:
1) Buy UST if price < peg 2) Buy BTC if price >= peg
thus significantly strengthening the liquidity around UST peg
3/ While buys and sells of UST are not meaningfully directional now, we felt it was valuable to have capital ready to be deployed in the current market.
As markets recover, we plan to have the loan redeemed to us in BTC, increasing the size of our total reserves.
2/ Across web3 teams struggle with intelligent allocation of user incentives to maximize acquisition, engagement and retention- this is because onchain data is (for now) limited in verifying user actions
3/ With expeditions, imagine an AR game where users can perform certain actions in meatspace to win nfts like collecting pokemon
And now imagine this becomes an open platform for any project or nft collection to incentivise targeted user behavior
1/ Five years ago, when I had the idea to create decentralized money for decentralized blockchains, all of crypto was running on centralized stablecoins.
Since then, the algorithmic stablecoin category created by $UST has become industry standard
Much has been said about anchor yields this past month. Meanwhile:
- Every eyeball on crypto has been glued to the yield reserves
- Daily active wallets up 10x YoY @ 20k, highest usership in DeFi
- Largest lending market in Defi
This is exactly what I wanted, anon.
Every umbrage you take adds more eyeballs to $UST and leads $BTC and $Luna to be market bought
You are helping the Terra Protocol to be the biggest stacker of sats in existence
So thank you anon, please keep going.
The Anchor Rate will likely adjust to something dynamic like this, where the yield reserve is favored to operate at surplus in long term: forum.anchorprotocol.com/t/dynamic-anchβ¦
But it will happen at #Lunatic terms, when soon there are no defi farms left to conquer