Do Kwon suggested significant modifications to the LUNA/UST balance structure in order to speed up the absorption of TerraUSD (UST) stablecoins, while the collapse was compared to the Lehman Brothers financial meltdown of 2008.
Do Kwon is the creator of Terraform Labs (TFL), which is responsible for UST, Terra (LUNA), and the Luna Foundation Guard (LFG).
Increased minting capacity might hasten the absorption of UST: Proposal
On Twitter, Do Kwon revealed the proposal’s contents. It discusses the unrivalled de-pegging of TerraUSD (UST), which is presently available at a 57 % discount from its initial peg to $1 value.
1/ Dear Terra Community:
— Do Kwon 🌕 (@stablekwon) May 11, 2022
According to Do Kwon, the only option to settle the situation is to burn the UST tokens which are abandoning the market. As a result, the UST price will rise, bringing it closer to the standard 1:1 USD peg.
As a result, Do Kwon advises increasing the protocol’s “mining capacity” from $293 million to $1.2 billion in equivalent, which will assist to speed up the token burning process.
Terra’s tragedy resembles with Lehman Brothers meltdown
Investors began withdrawing money from UST and related mechanisms in large amounts, after the major bitcoin crash. As a result, it lost its peg to the US Dollar, and its underlying asset, Terra (LUNA), crashed by 95%.
Mudit Gupta, a SushiSwap (SUSHI) icon and Polygon’s top information security officer, connects this collapse to the 2008 financial disaster caused by Lehman Brothers. It didn’t matter whether or not other businesses were doing well. Everything went downhill.
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