The Terra Foundation tweeted a new plan that is to restore the peg of UST and stake 240 million LUNA in the process.
While the meltdown of Terra and its stablecoin TerraUSD continues, the Terra Foundation is trying to save what can be saved.
LUNA suffered a monumental collapse that saw its value crater from $87 seven days ago to only $0.09 (!!) at the time of writing.
At the same time, UST has still not restored its peg and is trading around 50 cents, up from yesterday's $0.38 but still way below its peg.
The Terra Foundation addressed the catastrophe on its terra_money Twitter account, tweeting out a plan to expel the bad debt from UST circulation to "restore the health of on-chain spreads." A governance proposal passed the following emergency actions:
1. Proposal to burn the remaining UST in the community pool.
2. Burning the remaining 371 million UST cross-chain on Ethereum.
3. Staking 240 million LUNA to defend from network governance attacks.
In other words, the Terra Foundation is prepared to take the loss on its outstanding UST and LUNA in an effort to restore the peg.
Crypto Twitter Doubts UST Can Be Salvaged
Observers and analysts on Crypto Twitter are not convinced Terra can save its failing stablecoin even with the best intentions. The Block's VP of Research Larry Cermak commented:
According the Cermak, Luna may want to try giving up on UST and switching to another stablecoin like USDT or USDC — in essence, "adopting a foreign currency." But even that may not be enough, said Cermak, and Terra should commit its remaining reserves to compensate users.
Others suggested that an "epic proposal" from the Terra Foundation and its backers will be needed to save the entire ecosystem.
Following the collapse, Terra founder Do Kwon has been eerily silent. He published a 14-tweet thread yesterday, which struck a markedly different tone from his previous tweets that dismissed any possibility of a depeg ever happening.
LUNA has lost 99% from its all-time high value, with most analysts expecting it to go to zero, as LUNA has to be emitted to try and restore the UST peg.
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