Do Kwon, founder of Terra, reveals approach to save the UST stablecoin peg
Do Kwon, Terraform Labs’ modest co-founder, has revealed a plan to save the de-pegged stablecoin UST.
Terraform Labs CEO Do Kwon refuses to admit failure. Do Kwon has proposed his “rescue plan” for the Terra community after an 18-hour delay during which his coins Terra (LUNA) and TerraUSD (UST) suffered a face-ripping drop.
Terra has dropped 90% from its all-time highs, whereas the “stablecoin” UST is down 75% from parity with the dollar. But don’t worry, cocky Kwon has “several remedial measures” in the way to save the billions that have been knocked off the whole Terraform Labs market capitalisation.
In a word, the “decentralized” stablecoin protocol UST has devised a tentative solution to its devastating condition, in which its peg to the US dollar has collapsed. The procedure should strengthen UST burning, which has so far failed to achieve dollar parity for the stablecoin.
Kwon stated in the above Tweet post that his team expanded the base pool from 50 million to 100 million special drawing rights (SDR) and reduced PoolRecoveryBlock from 36 to 18. The minting capacity will rise from $293 million to over $1200 million.
In other words, the team will mint four times as much UST as usual.” Kwontative easing,” or money printing, is a new crypto word for the process of producing value out of thin air.
Why Kwon wrote “$1200M” instead of $1.2 billion is unclear. Some Twitter users think that it is to minimize the shock and reduce the scope of the problem.
Securitize Capital’s head of portfolio management, Adil Abdulali said:
“Unlike other stablecoins such as USD Coin and Tether, UST is an ‘algorithmic’ stablecoin and is not backed by cash reserves. Comparatively, Circle ensures USDC stability with each USDCoin backed by one U.S. Dollar, highlighting the importance of choosing the right stablecoin.”
Even though the Terra team faces a Sisyphean task, Do Kwon wants to rally the lunatics and “make noise” in favour of the Terraform ecosystem.
If UST reaches dollar parity and LUNA reaches all-time highs, it will be a strong contender for the greatest crypto turnaround ever.