amberrrr789
Member
Background of the USTC Collapse
Since May 2022, USTC and Terra have experienced a number of issues that have caused the stablecoin to lose its 1:1 peg to the US dollar. Several strategies, including the following, have been used to maintain the value of stablecoins:
Total buyback the most effective strategy to raise the price of USTC: to repurchase the whole supply. However, the cost of replacing the entire supply is the issue.
Destruction and burning of USTC. It would appear straightforward to destroy or burn current USTC supply. But setting up the destruction process costs a lot of time and money.
Safeguarding USTC There won't be any need to keep the complete supply of USTC frozen once it is finished. The lockdown must end before the entire supply may be released.
How can all USTC be frozen to raise a lot of money while executing periodic buybacks to keep everything from being entirely destroyed if none of the aforementioned solutions can address the problem? Is there? Yes, there is a way to make this happen, and I hope the community will accept it.
Solutions?
The proposed method would map USTC to the new stable currency stUSTC on the Terra network utilizing the Lido protocol on ETH, according to its logic. After then, the associated LUNC is restored. TERRA will be able to secure the debt and the ability to produce enough tax money to continue the peg and pay off the loan without putting them in the least risk of experiencing liquidity loss by shifting the debt to new stablecoin assets. Killing three birds with one stone is possible.
Three approaches to solving the issue
Prior to the market value of stUSTC matching the complete value of the asset reserve, take steps to ensure the stability of its currency value and carefully restrict its issuance scale.
Second, restart Terra ecology projects like Anchor to increase stUSTC usage and circulation.
Third, set up a full asset reserve machine system such that the asset reserve's total value is always equal to the total market value of stUSTC (over-collateralization).
What maximum size should the stUSTC first release have?
The three components of this important question are as follows:
First, depending on the present market value of LUNC, how much selling pressure can stUSTC (stable coin) withstand when the minting process is engaged? Although it currently has a market value of $2.2 billion, throughput limitations make it highly likely that it will only be able to withstand a selling pressure of 500 million US dollars before entering a death spiral.
Second, even if all USTC joins in the commitment, it can only result in the production of less than 400 million USD stUSTC, according to the current market price of USTC. Is the maximum level of commitment made by LUNC compatible with this scale? If it is, there is no need for alarm. If not, it would be imperative to limit USTC's stake size.
Third, the stUSTC issuance criteria can only be modified once the quantitative team has stressed-tested LUNC to ascertain the stablecoins' maximal carrying capacity.
Always keep the mode below the LUNC's maximum capacity. The recommended quantity is half of your maximum level of caution.
Why do miner arbitrage taxes? What portion ought to be taxed?
After staking to produce a new stable currency, stUSTC, arbitrage trading will replace it as Terra's main trading method in the early going. Therefore, fees from several arbitrage trades must be collected in order for the system to generate income. Should the appropriateness of this tax rate be greater than 1.2%? There is no answer to this problem.
Since May 2022, USTC and Terra have experienced a number of issues that have caused the stablecoin to lose its 1:1 peg to the US dollar. Several strategies, including the following, have been used to maintain the value of stablecoins:
Total buyback the most effective strategy to raise the price of USTC: to repurchase the whole supply. However, the cost of replacing the entire supply is the issue.
Destruction and burning of USTC. It would appear straightforward to destroy or burn current USTC supply. But setting up the destruction process costs a lot of time and money.
Safeguarding USTC There won't be any need to keep the complete supply of USTC frozen once it is finished. The lockdown must end before the entire supply may be released.
How can all USTC be frozen to raise a lot of money while executing periodic buybacks to keep everything from being entirely destroyed if none of the aforementioned solutions can address the problem? Is there? Yes, there is a way to make this happen, and I hope the community will accept it.
Solutions?
The proposed method would map USTC to the new stable currency stUSTC on the Terra network utilizing the Lido protocol on ETH, according to its logic. After then, the associated LUNC is restored. TERRA will be able to secure the debt and the ability to produce enough tax money to continue the peg and pay off the loan without putting them in the least risk of experiencing liquidity loss by shifting the debt to new stablecoin assets. Killing three birds with one stone is possible.
Three approaches to solving the issue
Prior to the market value of stUSTC matching the complete value of the asset reserve, take steps to ensure the stability of its currency value and carefully restrict its issuance scale.
Second, restart Terra ecology projects like Anchor to increase stUSTC usage and circulation.
Third, set up a full asset reserve machine system such that the asset reserve's total value is always equal to the total market value of stUSTC (over-collateralization).
What maximum size should the stUSTC first release have?
The three components of this important question are as follows:
First, depending on the present market value of LUNC, how much selling pressure can stUSTC (stable coin) withstand when the minting process is engaged? Although it currently has a market value of $2.2 billion, throughput limitations make it highly likely that it will only be able to withstand a selling pressure of 500 million US dollars before entering a death spiral.
Second, even if all USTC joins in the commitment, it can only result in the production of less than 400 million USD stUSTC, according to the current market price of USTC. Is the maximum level of commitment made by LUNC compatible with this scale? If it is, there is no need for alarm. If not, it would be imperative to limit USTC's stake size.
Third, the stUSTC issuance criteria can only be modified once the quantitative team has stressed-tested LUNC to ascertain the stablecoins' maximal carrying capacity.
Always keep the mode below the LUNC's maximum capacity. The recommended quantity is half of your maximum level of caution.
Why do miner arbitrage taxes? What portion ought to be taxed?
After staking to produce a new stable currency, stUSTC, arbitrage trading will replace it as Terra's main trading method in the early going. Therefore, fees from several arbitrage trades must be collected in order for the system to generate income. Should the appropriateness of this tax rate be greater than 1.2%? There is no answer to this problem.
