Terra to burn $1.4B UST and stake 240M LUNA to ‘stop the bleeding’
The Terra Money Twitter account shared the finer points of Do Kwon's initial rescue plan expanding the base pool, burning UST, and staking LUNA.
The Terra rescue story continues to unravel in a tweet thread, the TerraMoney Twitter account went into greater detail regarding the CEO of Terraform Labs.
The thread sheds light on Proposal 1164, Do Kwon's initial strategy for Terra from May 11. The proposal would better balance the algorithmic Stablecoin Terra USD(UST) by expanding the base pool for the currency. The proposal has received 220,000 votes at over 50%
Also, the tweet explains that there is a "supply overhang" of UST which explains Terra's (LUNA) or price depreciation. now they burn more UST.
“The primary obstacle is expelling the bad debt from UST circulation at a clip fast enough for the system to restore the health of on-chain spreads.”
Due to this, their emergency measures are to be implemented, one of which focuses on burning more UST.
2/ To expedite this goal, several measures are being taken. First, the current Prop 1164 will expand the base pool size and accelerate the burn rate of UST – helping deflate on-chain spreads. https://t.co/XLDkQTH4mF— Terra (UST) Powered by LUNA (@terra_money) May 12, 2022
The so-called Agora Proposal vote is imminent, shared by a user. The intern on the Terra Research forum in total. The burn should take the total amount of UST burned to 1.4 billion UST or 11% of the outstanding UST liabilities. the site details.
The team hopes expanding the base pool for the coin and burning more should save UST.
Point three concerning the staking of 240 million LUNA, will reportedly strengthen the network governance of the TERRA ecosystem.
However, for some observers, staking 240 million LUNA, or equivalent to $200 million, is not enough to save the project.
Regarding 3, the way things are going you would need to stake a lot more than 240 million $LUNA to ensure the safety of the network. $LUNA crashing in price and having the peg not restored is also a problem, the longer it takes the more $LUNA gets minted.— Meto () (@hodlmastermeto) May 12, 2022
commentators have suggested that Proposal 1164 will accelerate the ongoing "death spiral" of LUNA and UST.
The Crypto community was quick to call our Kwon's algorithmic Stablecoin Plus, out-of-the-ordinary theories have also been shared regarding a planned "attack" on the ecosystem orchestrated by competing players.