Terra will burn $1.4 billion in UST and stake 240 million LUNA to “stop the bleeding”

The story of Terra’s rescue continues to unfold. In a thread of tweets, The Terra Money Twitter account went into more detail about the UST rescue plan from Terraform Labs CEO Do Kwon..
The thread reveals information about proposal 1,164, Do Kwon’s initial strategy for Terra from May 11. The proposal would better balance the Terra USD (UST) algorithmic stablecoin by expanding the coin’s pool.. The proposal has received 220,000 votes, more than 50%.
The tweet thread also explains that there is an “oversupply” of UST that Explain the “dilution” of Terra (LUNA), or price depreciation. As a result, they must now burn more UST:
“The main hurdle is getting bad debt out of UST circulation at a rate fast enough for the system to restore health to on-chain spreads.”
Consequently, there are three emergency measures that need to be implemented, one of which focuses on burning more UST.
3/ TFL is also initiating three more emergency actions:
1. Proposal to burn the remaining UST in the community pool.
2. TFL will burn the remaining 371 million UST cross-chain on Ethereum.
3. TFL just staked 240 million $MOON to defend from network governance attacks.— Terra (UST) Powered by LUNA (@terra_money) May 12, 2022
3/ TFL is also initiating three other emergency measures:
1. Proposal to burn the remaining UST in the community pool.
2. TFL will burn the remaining 371 million UST cross-chain on Ethereum.
3. TFL just staked 240 million LUNA to defend against network governance attacks.
The so-called vote on the Agora Proposal is imminent, shared by user The Intern in the Terra Research forum. In all, the burn should bring the total amount of UST burned to 1.4 billion UST, or “11% of outstanding UST liabilities,” the site details..
In summary, the team hopes that expanding the coin base and burning more of them will save UST.
Point three, regarding the staking of 240 million LUNA, will supposedly strengthen the network governance of the TERRA ecosystem.
Nevertheless, for some observers, staking 240 million LUNA, or roughly the equivalent of $200 million, is not enough to save the project.
Regarding 3, the way things are going you would need to stake a lot more than 240 million $MOON to ensure the safety of the network. $MOON crashing in price and having the peg not restored is also a problem, the longer it takes the more $MOON gets lied.
— Meto (,️) (@hodlmastermeto) May 12, 2022
Regarding 3, as things are going, much more than 240 million LUNA would have to be staked to guarantee the security of the network. That the price of LUNA crashes and parity is not restored is also a problem. The more time passes, the more LUNA will mint
Other commentators have suggested that proposal 1,164 actually will speed up LUNA and UST’s current “death spiral”.
Cointelegraph previously reported that the cryptocurrency community was quick to criticize Kwon’s algorithmic stablecoin. In addition, unusual theories have also been shared regarding a planned “attack” on the ecosystem orchestrated by the competition.
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