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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.

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.

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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