The price of terra (LUNA) has fallen by as much as 99% in recent days to $0.05, the lowest price since the end of 2020. LUNA was last week in fifth place in terms of largest cryptocurrencies, but at the time of writing it falls to position 128. The UST stablecoin that caused this situation is currently 60% below its value.
Still, the makers of Terra don’t want to give up and come up with a rescue plan for LUNA as well as for UST. Terra founder Do Kwon, CEO of Terraform Labs, unveiled the first measure yesterday.
Of community proposal 1164 wants to save the team UST through the base pool enlarge. The amount of UST that can be exchanged for LUNA is then quadrupled. This ensures that UST owners can still cash out, but also puts even more pressure on the LUNA price. The proposal has now received 62.6% of the votes in favour.
New measures for LUNA & UST
This morning, Terraform Labs unveiled even more measures to save this crypto. First, the team wants the remaining UST tokens in the community pool destroy Terra. This concerns no less than 1 billion worth of UST that is destroyed in this token burn† Normally, this pot would be worth $1 billion, but it’s only $400 million at the time of writing.
3/ TFL is also initiating three more emergency actions:
1. Proposal to burn the remaining UST in the community pool.
2. TFL will burn the remaining 371 million UST cross-chain on Ethereum.
3. TFL just staked 240 million $LUNA to defend from network governance attacks.
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) May 12, 2022
In addition, the team will recover 371 million UST, which are stored (wrapped) on Ethereum (ETH), to Terra and then destroy it as well. That means that a total of nearly 1.4 billion UST will be destroyed, about 11% of the total supply.
Finally, TerraForm Labs will lock down 240 million LUNA tokens to protect the Terra network. Because the price has plummeted so much, the chance that someone can buy a huge amount of LUNA to perform a so-called 51% attack increases. This person can then temporarily take over the network, but the pinned LUNA must prevent that.
There is a very skeptical response to the proposals, but there is also a lot of fear in them. In fact, the panic is so great that other stablecoins are currently becoming somewhat unstable. Here’s how people sell USDT in exchange for USDC:
People confusing $USDT and $UST and panicking.
People don’t understand the difference between an under collaterized algorithmic stablecoin and a backed stablecoin.
panic dumping $USDT for $USDC and plain old $USD†
Peak fud time.
Warning: this post will attract “Tether truthers”
— WhalePanda (@WhalePanda) May 12, 2022