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Terraform Labs Unveils Additional Measures to Restore LUNA and UST


Terraform Labs has proposed a number of measures aimed at restoring the algorithmic stablecoin UST and the LUNA cryptocurrency.

The company noted that the oversupply of UST puts pressure on LUNA quotes. According to the developers, their main task is to withdraw “bad debts” in the stablecoin from circulation in a fairly short time.

One of the main measures is the activation of offer #1164, which was previously described by the head of Terraform Labs, Do Kwon. The initiative involves expanding the LUNA base pool and increasing the issuance of cryptocurrency, which supposedly will allow the required amount of UST to be withdrawn from circulation faster.

At the time of writing, UST is trading near $0.47, while LUNA is trading at $0.05, according to CoinGecko. A week ago, the first one was pegged to the US dollar, while the second one was around $85.

Terraform Labs proposed additional measures to stabilize the situation:

  • Burn the rest of the community pool of the UST project (about 1 billion tokens);
  • Burn 371 million UST on the Ethereum blockchain;
  • Allocate 240 million LUNA to protect against potential attacks on the network.

“In aggregate, when these three offers are activated, about 1,388,233,195 UST will be withdrawn from circulation. This is approximately 11% of the total stablecoin supply,” the developers wrote.

The company’s measures have been criticized online. In particular, some users have noticed that proposal #1164 will only accelerate the “death spiral” of the ecosystem. The panellists also noted that an attempt to save UST would lead to the complete depreciation of LUNA.

According to The Block analyst Larry Cermak, the only way out for Terraform Labs is to abandon UST and focus on the development of the main network. He emphasized that as the ecosystem grows, the project team must pay off the stablecoin debt.

“Of course, even if they do what I say, the chances of success are probably zero. However, otherwise it is 100% zero and the situation cannot get better for legal reasons. In addition, if Terra still has reserves, they absolutely must send them to compensate for the losses of users, ”Cermak wrote.

Recall that CoinDesk journalists found out that Do Kwon was one of the anonymous co-founders of the crashed algorithmic stablecoin Basis Cash.

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My profession is a journalist, but my hobby for 8 years has been studying Forex investing and trading. During this time, I managed to gain extensive experience in investing and trading cryptocurrencies and double my capital in the Forex market. To be the author of this magazine, the site owners invited me to participate in one of the 2020 trading webinars, and I will try to reveal the most relevant crypto market news for you.

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