Do Kwon, CEO of Terraform Labs, has not accepted defeat. After an 18-hour wait in which Terra's LUNA and TerraUSD (UST) endured a face-ripping freefall, Kwon has announced what he hopes will be a rescue plan for the Terra community.
LUNA is down 90% from its all-time highs, while the “stablecoin” UST is 75% below the dollar parity. In an attempt to save Terra, Kwon has planned “several remedial measures” to rescue the billions wiped off the total Terraform Labs market cap.
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.— Do Kwon (@stablekwon) May 11, 2022
In a nutshell, the “decentralized” stablecoin protocol UST has come up with a preliminary solution to its disastrous situation where its peg to the United States dollar has broken. The process should reinforce the burning of UST, which so far has been ineffective in achieving dollar parity for the stablecoin.
In the above Tweet thread, Kwon suggested that his team will increase the base pool from 50 million to 100 million special drawing rights (SDR) and decrease PoolRecoveryBlock from 36 to 18. This will increase minting capacity from $293 million to around $1200 million.
It’s unclear why Kwon wrote “$1200M” rather than $1.2 billion. Some Twitter commentators suppose it’s to lessen the blow and tone down the scale of the problem.
Adil Abdulali, head of portfolio management for Securitize Capital, commented:
“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.”
In spite of the potentially Sisyphean task ahead of the Terra team, Kwon continues to rally Terra’s self-proclaimed “lunatics” and make noise in support of the Terraform ecosystem.
14/ Terra’s return to form will be a sight to behold.— Do Kwon (@stablekwon) May 11, 2022
We’re here to stay. And we’re gonna keep making noise.
If UST reaches dollar parity and LUNA returns to all-time highs, it will be a solid candidate to be the most remarkable crypto comeback of all time.