Terraform Labs launches 3 emergency actions to save LUNA and UST Stablecoin

On Thursday, Terraform Labs, the team responsible for the Terra ecosystem . outlined Three emergency measures It aims to save LUNA and its original stablecoin UST from collapse.

The three actions include burning the remaining underground reservoirs in the community pool, and burning any ground reservoirs still present Ethereumand LUNA raised $240 million to protect the project from government attack.

With a current market capitalization of approximately $143 million, there is not nearly enough liquidity in LUNA to support the Terra mint-and-burn mechanism and bring UST’s market value of $7.2 billion back to par (or lower).

So the Terraform team suggests destroying the ground tanks without replacing them with LUNA.

The LUNA serves as a stabilization platform for terrestrial treasuries to help maintain its currency peg to the dollar. Investors can always swap one floor treasury for $1 of LUNA and vice versa. If the price of the floor treasury drops below $1, investors can buy the discounted token, exchange it for $1 at LUNA, and then sell the newly minted LUNA on the market for a profit. Each time this swap is made, the token sold is burned (the cipher word means destroyed).

First, Terraform Labs proposes burning approximately US$1 billion in the project’s community pool. The Community Pool is a special fund dedicated to financing various projects built on top of the Terra blockchain. Any community member can create a governance proposal for spending tokens in the community pool.

The current circulating supply of underground reservoirs is 12.12 billion, according to data from CoinMarketCap. By burning tokens from this pool, the movement will reduce the width by about 8.05%.

The second action seeks to return $371 million of Ethereum to Terra and burn that too. This would reduce the supply of ground tanks by another 3%.

In aggregate, the first two emergency measures would reduce the circulating supply of ground reservoirs by just over 11%.

“TFL (Terraform Labs) is currently exploring how best to incinerate the remaining ground tank holdings,” chirp Terraform coefficient. “A lot of it has been assembled in recent days to absorb the selling of floor tanks in the many open markets.”

Terraform to prevent governance attacks

The third proposal also states that an additional 240 million LUNA tokens will be accumulated to protect the network from governance attacks.

LUNA is Terra’s token for governance, which means it can be used to vote on proposals within the ecosystem. Because of the massive increase in the amount of LUNA device available on the open market, passing on malicious offerings is a major risk.

The rolling supply of LUNA has increased to 13.72 billion Over the past week because of Suggestion 1164which essentially increased the amount of LUNA that could be minted in each block.

However, it remains to be seen whether these actions will save the interconnection of the ground tanks or the price of LUNA.