Terra is proposing a burn of the remaining tokens held in the community pool along with 371 million tokens lying on the Ethereum cross-chain while staking 240 million LUNAs to avoid governance attacks that could have catastrophic effects for the project if achieved.
The official Twitter account of Terra’s UST stablecoin shared more details about the rescue plan initially outlined by the founder of Terra Labs – Do Kwon – to rescue the project from the debacle it has faced in the past few days after withdrawals on the Anchor Protocol spiked and forced the organization to take drastic measures.
In summary, the developing team is proposing a burn of 1.39 billion UST tokens to reduce supply-side pressures. This total accounts for around 11% of the token’s outstanding supply.
News about this rescue plan are coming out at a point when LUNA is trading at just 3 cents on the dollar. Thus far, the token is standing 99.97% below where it was roughly a month ago when it climbed to its all-time highs of $119.55 per coin. Meanwhile, UST remains off its peg as it is currently standing at $0.60 per coin.
Meanwhile, the Terra-based Anchor Protocol is proposing to trim the yields offered for depositing UST to 4% – down from a previous 19.5% figure – amid the collapse of the stablecoin.
According to reports from CoinDesk, Kwon had a lead role in a dead project known as Basis Cash that he founded as an anonymous character called “Rick Sanchez”. Basis Cash, which traded under the ticker symbol BAC back in 2020, was an algorithmic stablecoin that used code instead of collateral to maintain its peg to the US dollar.
However, the idea of an algorithmic stablecoin kept circling back until Kwon launched Basis. Even though CoinDesk reports that Kwon distanced himself from that project eventually to launch Terra, his involvement is clear and there is evidence that it was him behind the pseudonymous of “Rick” – the character who came up with most of the ideas that powered Basis at the time.
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