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Terra Founder Do Kwon Announces “Rescue Plan” for Stablecoin UST



 Do Kwon, CEO of Terraform Labs, isn't giving up on his crypto project anytime soon. After a long wait, in which the associated cryptocurrency Terra ( LUNA ) and stablecoin TerraUSD (UST) were in free fall, Kwon has now announced the supposed "bailout plan" .


While Terra is down a massive 90% from its record high, the actual “stablecoin” UST is now 75% behind target parity with the US dollar. To counteract this, Kwon has now envisaged "several countervailing measures" to erase the heavy losses of the past few hours.



Accordingly, there should now be a temporary solution to reconnect the “decentralized” stablecoin UST to the US dollar. For this purpose, UST should now be burned even more intensively than it already was, because this mechanism was obviously still too weak in its previous design.



TerraUST is now below $0.50. Source: TradingView

In order to achieve this, the pool of the so-called Special Drawing Rights (SDR) is to be reduced from 50 million to 100 million, at the same time the PoolRecoveryBlock is to be reduced from 36 to 18. These steps would increase the minting capacity from 293 million to almost 1,200 million.


Accordingly, the development team could mine four times as much UST as before. However, these questionable monetary policy measures are already being denigrated in the crypto community as “ Kwon-titative easing ”.


It is also unclear why Kwon wrote "1,200 million" instead of 1.2 billion, although some Twitter users suspect that this semantic game is deliberately intended to downplay the magnitude of the problem.


Adil Abdulali, Head of Portfolio Management at Securitize Capital, comments:


“Unlike stablecoins like USD Coin and Tether, UST is an 'algorithmic' stablecoin that is not backed by any actual equivalent. For comparison: At Circle, the stability of the USDCoin is guaranteed by the fact that each currency unit is backed by 1 US dollar. This underlines the fact that it is important to choose the right stablecoin.”

In view of the almost insurmountable mammoth task facing Do Kwon's Terra team, the latter calls on his community to "beat the drum" for his project.



Should the UST actually be successfully pegged back to the US dollar and LUNA climb back to previous record highs, it might even be the most impressive comeback in the crypto industry ever.

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