Terra is a decentralized financial payment network that rebuilds the traditional payment stack on the blockchain. Luna is the reserve currency of the Terra platform. It has three core functions: i) mine Terra transactions through staking, ii) ensure the price stability of Terra stablecoins and iii) provide incentives for the platform’s blockchain validators.
Terra is preparing to burn 1.4 billion UST and increase the mintage rate of LUNA in an attempt to save the ecosystem. Meanwhile, LUNA has plummeted almost 100%.
The story about the collapse of the ecosystem of the Earth continues to evolve: Land USD (UST) remains below its expected level of $1, and its sister token, LUNA bleeds out in a 95%+ drop.
In the meantime, developers are doing everything they can to rescue the ecosystem. This Thursday, new emergency measures have been announced to stop the massive bloodbath that the two native currencies of Earth including the deployment of a previous proposal from the founder of Terraform Labs (TFL), Do Kwon, to burn UST and increase the ability to mint LUNA.
As reported by DiarioBitcoin , Kwon showed his support the opposite of Resistance, it is a threshold that crypto’s price doesn’t fall below. for Proposition 1164 on Wednesday. that was submitted at the government forum of Earth and seeks to increase LUNA’s minting capacity from USD $293 million to USD $1.2 billion.
Terra to burn 1.4 billion UST
The Twitter account an account is essentially a whose purpose is to track the financial activities of a specific asset/ of Terra Money went into more detail on the bailout plan this Thursday. The team believes that the downward pressure on UST parity is diluting LUNA, preventing recovery for both. tokens while creating an excess of UST; and to address a place where cryptocurrency can be sent to and from, in the form of a string of letters and numbers. this issue they have proposed burning UST and increasing the available amount of LUNA.
The main obstacle is to push bad debt out of UST circulation fast enough for the system to restore the health of chain spreads.
The primary obstacle is expelling the bad debt from UST circulation at a clip fast enough for the system to restore the health of on-chain transactions that are recorded on the blockchain itself and shared with all of the participants are done on-chain. spreads.
— Terra (UST) ???? Powered by LUNA ???? (@terra_money) May 12, 2022
Recall that UST is an algorithmic stable coin a coin can refer to a cryptocurrency that can operate independently or to a single unit of such cryptocurrency. that works by linking to another coin, LUNA. Users can always trade 1 UST for USD $1 of LUNA; every time they do this, too ” burn “or destroy that UST (take it out of circulation). However, only a limited amount of USTs can be sold per day.
Consequently, there are three emergency measures to implement, one of which focuses on burning more USTs. This burning action would take the coins out of circulation, which can be considered as a deflationary effect, as it reduces the supply of that asset.
- 1. Proposed burning of the remaining USTs in the community swimming pool.
- 2. TFL will burn the remaining 371 million UST of the cross-chain cross-chain is a technology that enhances the interconnection between blockchain networks by allowing the exchange of information and value. in Ethereum a decentralized open-source blockchain with smart contracts functionality. .
- 3. TFL just wagered (stake) 240 million LUNA to defend against network a network refers to all nodes in the operation of a blockchain at any given moment in time. governance attacks.
“ Currently, UST burning destroying a certain number of digital coins to reduce their issue. This method is used to fight inflation and increase the value of cryptocurrency. All token burning transactions are recorded in the blockchain as a transaction. Therefore, anyone can verify that the coins were destroyed. is too slow to keep pace with the demand for excess UST to exit the system which is hindered by the size of BasePool “, reads the proposal. “ Eliminating a significant portion of the excess UST supply at a time will relieve much of the parity pressure on UST. “.
The team indicated that the measure should burn a total of 1.4 billion UST, or “11% de los pasivos pendientes de USTThe Commission’s “Community and Incentive Funds”.
Will it be enough to save LUNA and UST?
At the same time, Earth wants to increase the available LUNA Base Fund to $100 million, which in turn increases mintage capacity to over $1 billion. Both measures will help accelerate UST’s outflows and thus push it closer to parity. However, it will also drive down the price of LUNA, which is already at historic lows.
As he explainsThe Block a file containing information on transactions completed during a given time period. Blocks are the constituent parts of a blockchain.the measure will increase four times the amount of UST that can be redeemed for LUNA per day. This would in turn increase the speed with which LUNA’s supply could expand, which would further worsen its price situation by expanding its supply. La background theory is that rescuing UST parity would be the quickest way to fix the situation; even if it affects LUNA.
Point three, relating to the wager ( staking participation in a proof-of-stake (PoS) system to put your tokens in to serve as a validator to the blockchain and receive rewards. ) of LUNA 240 million, or about USD $200 million, will seek to strengthen the governance in the world of cryptocurrencies, governance is defined as the people or organizations that have decision-making powers regarding the project. of the ecosystem network. Earth the team said. Nearly half a billion people (88% of the community) have already voted for the proposal 1164, with 61% of the votes in favour The update will then be carried out.
However, not all users believe that these measures will be enough to rescue the ecosystem, and some have even pointed out that the proposals will accelerate the “demise of the ecosystem”. death spiral ” en curso de LUNA y UST. Para el momento de edición, UST se cotiza muy por debajo de su nivel esperado de USD $1, a 64 centavos de dólar mientas LUNA tiene un precio de USD $0,03.
- Prior to UST, Do Kwon created another stablecoin a cryptocurrency with extremely low volatility, sometimes used as a means of portfolio diversification. Examples include gold-backed cryptocurrency or fiat-pegged cryptocurrency. project that also failed: report
- During Drastic Price Drop, Tether Announces Tron Chain Switch to Ethereum and Avalanche
- Charles Hoskinson joked about what happened with Terra and reiterates the decentralized decentralization refers to the property of a system in which nodes or actors work in concert in a distributed fashion to achieve a common goal. nature of Cardano’s treasury
Article by Hannah Estefania Perez / DiarioBitcoin
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