USTC problems background
Since May 2022, USTC and Terra have been plagued with several issues that have caused the stablecoin to lose 1:1 peg to US dollar. Many solutions have been proposed to stabilize the value of stablecoins, including:
whole buyback The most effective strategy to raise the price of USTC is to repurchase the entire available supply. But the money required to repurchase the entire supply is the issue.
Destroying/burning USTC Destroying/burning existing USTC supplies may sound easy. However, it requires huge capital and takes a long time to establish the destruction mechanism.
securing USTC When it's done, the option to freeze the whole supply of USTC no longer makes sense. At the conclusion of the lockdown, the entire supply must be released.
If none of the above suggested solutions can solve the problem, how to freeze all USTC in order to raise a lot of capital while doing occasional buybacks to avoid finally destroying everything? Is there? Yes, there is a way to achieve such an effect and I hope it will be accepted by the community.
The solution
The logic of the proposed method is to point the Lido protocol on ETH and map USTC to the new stable currency stUSTC on the Terra network. Then restore the attached LUNC. By allocating the debt to new stablecoin assets, TERRA will both lock down the debt and the ability to generate enough tax revenue to resume the peg and recover the debt without giving them a single chance to lose liquidity. achieve You can say three birds with one stone.
About stUSTC
How did the $1 price of stUSTC stabilize?
Like pre-collapse USTC, stUSTC is still an algorithmic stablecoin, bolstered by LUNC's $2.2 billion market cap. Stablecoins can only be generated by staking in the early stages of stUSTC, so there will be no excess stUSTC in the market before then. An individual wishing to receive stUSTC can only reach him in two ways:
Staking or embossing. The pledge is to freeze his USTC debt and minting requires his LUNC writing.
How can the applicability of stUSTC be maintained and expanded?
It will mislead consumers as a new algorithmic stablecoin if it can't broaden its use cases, especially given the history of USTC's demise. Since the profit will be liquidated right away, stUSTC will continue to trade in the tiny size area.
Three ways to solve the problem
First, we will strive to ensure the stability of the currency value and strictly control the issue size until the market value of stUSTC matches the total amount of the reserve.
Second, Restart Terra ecology, such as Anchor, to expand the application and circulation of stUSTC.
Third, set up a full asset reserve machine system such that the asset reserve's total value is always equal to the total market value of stUSTC (over-collateralization).
Since May 2022, USTC and Terra have been plagued with several issues that have caused the stablecoin to lose 1:1 peg to US dollar. Many solutions have been proposed to stabilize the value of stablecoins, including:
whole buyback The most effective strategy to raise the price of USTC is to repurchase the entire available supply. But the money required to repurchase the entire supply is the issue.
Destroying/burning USTC Destroying/burning existing USTC supplies may sound easy. However, it requires huge capital and takes a long time to establish the destruction mechanism.
securing USTC When it's done, the option to freeze the whole supply of USTC no longer makes sense. At the conclusion of the lockdown, the entire supply must be released.
If none of the above suggested solutions can solve the problem, how to freeze all USTC in order to raise a lot of capital while doing occasional buybacks to avoid finally destroying everything? Is there? Yes, there is a way to achieve such an effect and I hope it will be accepted by the community.
The solution
The logic of the proposed method is to point the Lido protocol on ETH and map USTC to the new stable currency stUSTC on the Terra network. Then restore the attached LUNC. By allocating the debt to new stablecoin assets, TERRA will both lock down the debt and the ability to generate enough tax revenue to resume the peg and recover the debt without giving them a single chance to lose liquidity. achieve You can say three birds with one stone.
About stUSTC
How did the $1 price of stUSTC stabilize?
Like pre-collapse USTC, stUSTC is still an algorithmic stablecoin, bolstered by LUNC's $2.2 billion market cap. Stablecoins can only be generated by staking in the early stages of stUSTC, so there will be no excess stUSTC in the market before then. An individual wishing to receive stUSTC can only reach him in two ways:
Staking or embossing. The pledge is to freeze his USTC debt and minting requires his LUNC writing.
How can the applicability of stUSTC be maintained and expanded?
It will mislead consumers as a new algorithmic stablecoin if it can't broaden its use cases, especially given the history of USTC's demise. Since the profit will be liquidated right away, stUSTC will continue to trade in the tiny size area.
Three ways to solve the problem
First, we will strive to ensure the stability of the currency value and strictly control the issue size until the market value of stUSTC matches the total amount of the reserve.
Second, Restart Terra ecology, such as Anchor, to expand the application and circulation of stUSTC.
Third, set up a full asset reserve machine system such that the asset reserve's total value is always equal to the total market value of stUSTC (over-collateralization).
