The co-founder of Terraform Labs, Do Kwon, has published a rescue plan for the de-pegged stablecoin UST.
The CEO of Terraform Labs, Do Kwon, will not concede defeat. Do Kwon has presented his “rescue plan” for the Terra community after an 18-hour wait during which his coins Terra (LUNA) and TerraUSD (UST) underwent a harrowing freefall.
Terra is 90% lower than its all-time highs, whereas the “stablecoin” UST is 75% below dollar parity. But have no worry, since the arrogant Kwon has prepared “several corrective steps” to restore the billions lost from Terraform Labs’ market capitalization.
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.
— Do Kwon 🌕 (@stablekwon) May 11, 2022
In a word, the “decentralised” stablecoin protocol UST has devised a tentative solution to its catastrophic issue, in which its peg to the U.S. dollar has failed. The procedure should bolster the burning of UST, which has been ineffective thus far in establishing dollar parity for the stablecoin.
Kwon suggested in the preceding Tweet thread that his team would expand basepool from 50M to 100M SDR and lower PoolRecoveryBlock from 36 to 18. This will raise capacity from $293 million to around $1,200 million.
In essence, the team will produce four times as much US dollars as usual. The process of creating wealth out of thin air has been dubbed “Kwontative easing” or money printing.
It is unknown why Kwon wrote “$1200M” instead of “$1.2 billion”; some Twitter commentators speculate that he did so to soften the shock and reduce the magnitude of the situation.
Head of Portfolio Management at Securitize Capital, Adil Abdulali, told that “UST is a “algorithmic” stablecoin that is not backed by cash reserves.” He issued a warning by stating:
“Unlike stablecoins such as USDC and Tether, UST is an algorithmic stablecoin that is not backed by monetary reserves. In comparison, Circle assures USDC stability by backing each USDCoin with a single U.S. dollar, underscoring the significance of selecting the appropriate stablecoin.”
Do Kwon continues to rally the lunatics and “make noise” in favour of the Terraform ecosystem in spite of the Sisyphean challenge facing the Terra team:
14/ Terra’s return to form will be a sight to behold.
We’re here to stay. And we’re gonna keep making noise.🌕
— Do Kwon 🌕 (@stablekwon) May 11, 2022
If UST hits parity with the dollar and Luna returns to all-time highs, it will be a strong contender for the most spectacular crypto comeback ever.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
