Proposal to save the Terra blockchain, protocol (and accompanying software), LUNA coin, UST coin, community related projects, community pool and attributed finances, and the governance community, in its current form (and any aspects to which the governance community would be considered having authority over or in, and only to the degree they have authority over or in). This proposal also has an impact on the ability to recover LUNA and UST value over the mid to long term.
To strengthen the governance community of LUNA holders, to restore (however slowly) the trust of UST users, and to enable the longevity of the project.
Link To Vote:
- Proposal 1597: Terra Station
- Note: For some reason the proposals are not showing up in Terra Station > Governance > Voting (with the exception of proposal 1188 and 1164 as of 12:49pm UTC, please use this link to vote and if you like this proposal, please direct others to this link as well to vote)
Essence behind the proposal:
The intent behind this proposal is in no way to diminish Do Kwon or TerraForm Labs work (or this communities appreciation of them), and it is hoped that they may be the ones to carry this community through this transitional time of restoration and recovery of this project. However, if this is not consistent with TerraForm Labs vision, this community (if this proposal should carry), desires to express that we would like to continue and to find the best leadership forward to do that if Do Kwon no longer wishes to lead this project and community toward restoration in its current form (although it will always be recognized that it was only possible because of his and TerraForm Labs hard work and vision).
This proposal recognizes as background:
- Both LUNA and UST are assets (A) that are tied together. When they cross markets there is a liability (L) and the net result is equity (P). A - L = P.
- LUNA is the governance coin (and a reserve), UST is the stable coin. Both have value. Both back one another up. The net of both added together are the assets (in addition to any outside reserves that are owned by the DAO governance holding LUNA).
- Contrary to belief, UST and LUNA are backed by real money - it is the buying power of the money received (or expended) when the coins were / are initially sold (or bought back) (there may be some other forms of monetizing as well - but this is the essential essence).
- The minting / burning is really just an algorithmic way of moving funds from one supply market to the other in order to bring equity. So, this is real money, both Terra and the DAO will be responsible for this legally. You can not just burn or mint without actual value behind it.
- Some have asked why the supply of UST keeps growing - people are selling it faster than it is being purchased with LUNA (burned in exchange for mint in LUNA). However, I will say that the market cap is still in the billions (even if the pool size is diluted). This is why the minting process was exaggerated in LUNA, in order to buy back UST to diminish the UST pool size (making it more scarce, and therefore more valuable - and since LUNA was what was mainly being used to do that, it made LUNA less scarce and therefore less valuable). It is supply and demand.
- The problems have been:
- the burn / mint rate was hard set rather than set based upon volume of sales / exchanges on the Terra blockchain
- no automated volume level restrictions on sale of assets (purchase of assets should not be limited)
- stopped purchases at the time adding buying power to the assets was needed (although I do realize it was to prevent a run on sales and the value of supply and trust level - the protocol should be amended to allow sales to be rate controlled while buying is not). If there is a reason buying would present a problem to the ecosystem, then that supply should be purchased and held in reserve.
- loaning money from reserves to market makers rather than using it to buy back UST to diminish supply and raise the value (Terra could have done this themselves, or the Governance could have done this)
- there may have been an emergency plan that the Governance had approved, but if so, it was either did not exist, was not followed well, or it has room for improvement (which is probably true for every emergency plan).
- throwing in the towel when there is still 3B in market cap for LUNA (it is just diluted right now), and 2B in UST (as of 5/14 at 4:37pm CT). This is more than enough capital to restart this project - new projects would love to have that much capital to start with. Will it be the 40B dollar size it was - no, it has already lost size, and you will need to start where you are at 5B. But, this is more than enough to both save LUNA and UST over the mid term by burning and minting as buying power is still available in LUNA, buying back UST with remaining reserves, and then as UST pool size shrinks, slowly resell UST and covert it to LUNA (by burning and purchasing back LUNA). This is how every single person eventually can regain the value of their LUNA and UST. No bailout plan is going to get your money back with the exception of pennies on the dollar - wouldn’t you rather wait it out and potentially get the whole amount back and have the opportunity for growth? The community can vote on whether they would like a guideline in place for who, such as low income persons or those who had savings account products, are paid back first if there is a desire to provide more immediate help. If not, then something that instead is easy and equally applied to all based on their shares / number of coins (or something else).
- There is not much difference between the model that Terra used here and the model of most fiat currencies (although in banking, the funds are insured and that is a big difference).
- Hard currency is better than fiat in that it is actually backed. It is true that the fed backs currency, and that our currency is the currency of the international monetary fund, but even the fed uses dollars, or derivatives of dollars, to partially back up the very dollars they release (which is completely crazy). Our only saving grace is that the US still holds the largest gold reserve, but even it most likely would not have been enough if a similar situation that happened to LUNA / UST was scaled up and attempted on a country wide level or against the NATO states and the international monetary fund. That is why the fed constantly manipulates the fiat system to attempt to keep it in close enough balance, even if it means they devalue money (sadly). The point though for this situation is that the LUNA / UST project was not much different than fiat monetary policy, although it was obviously overextended and did not back the stablecoin with enough reserve value and restrictions to selling under pressure.
- There is an obligation to those who were sold LUNA / UST as a savings account (that one is a legal liability that I am pretty sure that if you do not recover from will have some serious legal implications - possibly even for governance members, but particularly for the day to day leaders of the DAO governance project).
- The course was not fundamentally flawed (or at least were no more flawed than fiat monetary policy), but certain specifics mentioned above were (and currently are - and there may be others that I have not mentioned or thought of besides these I admit, but as I see it, these mentioned above are the central ones). The problem now is whether either the current team will re-engage, or the DAO Governance members will take leadership and relieve the current day-to-day team, and place a new day-to-day team in place to re-engage. No amount of rebranding is going to be any easier than just working through this - and it will come with much less legal complications and responsibilities in the near future.
Putting this thing back together is completely doable at this point - without even having further outside funding (you have 5B in market cap, although I do realize that cash on hand is less, between the two tokens, and whatever was not loaned out from reserves), but rather working over the next number of months to minimize the pool sizes, regain trust by restoring the value of the assets (both using the current assets and minimizing the pool sizes of those assets, as well as bringing in new purchases). If you happen to get further outside help - fine. But, you have what you need financial now to do this, and although it will recover on a smaller scale and most likely slower than most would like, it is more than doable. You have a fiduciary legal responsibility to do this from what I am seeing (although I do admit that I am only seeing as an observer and not from the day-to-day leadership team, or those who have been closely tied to the DAO governance since the beginning).
The idea here is to shrink things down to their actual monetary size, and then move from there toward new growth - it still is going to be larger than most other decentralized stable coin projects.
If I were to list the threads that seem most promising at this point they would be:
[Proposal] 8 Steps to Save Luna Now - Economic Refactoring Proposal From Industry Professionals
- In regards to the points I mentioned above that are similar
Buy Back and Burn $LUNA
- In regards to shrinking the pool sizes (although I disagree about UST being done with - at this point they are just diluted pools that need to shrink through equity [purchasing through minting and burning and purchasing through buy backs and either hold in reserve or burn after purchase]). But, minting and burning should not just happen in a way that violates monetary buying power under the token assets - you can’t just burn without purchasing it first, that is essentially devaluing the whole system monetarily, and then you do hit the point of being counter productive and driving away any remaining value.
- Proposal 1164 or 1169
- Only as temporary solutions to allow the minting purchasing of UST and burning sale of UST to shrink the pool and provide a smaller supply to enable a larger demand. On a permanent level, these should be based on volume of trade, and that trade should be the UST to LUNA (and vice versa) on the Terra chain. Do not worry about arbitrage on the exchanges, you can apply a volume control of exchange on your own block chain for when sales / exchanges are too much volume that could create a run and quick loss of confidence - you can slow these down to a reasonable pace on your own block chain (let traders on the exchanges do what they would like).
Terra Ecosystem Revival Plan
- I would completely disagree, but I can sympathize with how difficult this must be for Do Kwon both as someone who is probably very tired right now after this week, and someone who is watching a good portion of the work he has done feel lost as people continue to say it’s over.
- That Do Kwon and TerraForm Labs position be one that looks to save the Terra blockchain, protocol (and accompanying software), LUNA coin, UST coin, community related projects, community pool and attributed finances, and the governance community, in its current form (and any aspects to which the governance community would be considered having authority over or in, and only to the degree they have authority over or in). If there is no formal statement to the governance community after 5 days from the exact time of passage (should this proposal should carry), then it will be assumed that Do Kwon and TerraForm Labs do not see this as in line with their vision for the project, and the governance community may take whatever action, including legal, to retain funds and ability for day-to-day operations of the project that the governance community would be considered having authority over or in.
- That if this not be in line with the vision of Do Kwon and/or TerraForm Labs, that this community would agree to take over the Terra blockchain, protocol (and accompanying software), LUNA coin, UST coin, community related projects, community pool and attributed finances (and any aspects to which the governance community would be considered having authority over or in, and only to the degree they have authority over or in).
- That if the vision of Do Kwon and/or TerraForm Labs is not in line with the above subpoint, that the top 5 stakeholders in LUNA, which shall include at least 2 validators, an 2 persons who are not affiliated with TerraForm Labs, it’s officers, board members, or employees, be selected to provide a slate of candidates, that shall be paid modest fees for their service, from the community pool, to the community along with the summary amount paid for their services. Each of these 5, separately, shall list the candidates in the https://agora.terra.money system. These shall include (at minimum):
- A lead economist
- A lead financial advisor
- A lead technical officer
- Legal counsel
- A bookkeeper, or auditing firm, or relevant service (who shall be a cosigner on any financial transactions over $400)
- Two of the four roles can be shared by the same person (except that the cosigners of financial transactions shall be two or more separate people).
- In the absence of any leadership from this project, the temporary day-to-day operation will devolve to one of the top 5 stakeholders in LUNA (or their representative), to be voted on by the community. This person can also be removed by the governance community if it is determined that they are not serving the best interests of the governance community. The modest amount that they would be paid for their services from the community pool would need to be reported to the community in summary. They would also be able, during their temporary time in day-to-day leadership, to represent any legal matters on the part of the governance community.
- Note: It is to be iterated again, that although this item is a strong signal that this community (if this proposal carry) is not willing to abandon this project in its current form, meaning both LUNA and UST in their current version, although with any necessary changes for financial soundness, but not a rebrand, not with principles that would violate fiduciary responsibility of the project, or financial value. It is meant to be a strong signal that we would rather go forward in an attempt to restore value and trust to LUNA and UST holders (no matter how long that may take). It is also our intent to continue forward with current leadership to the degree that that leadership has the same vision, and to the degree that this governing community has legal recourse to do so (if this proposal should carry).
- That the person, or persons, in charge of day-to-day operations shall communicate in a reasonable amount of time. In emergency, and/or crisis situations, a reasonable amount of time is at least once per a day during business days.
- That this governing community recognizes that we feel an obligation to those who were sold LUNA / UST as a savings account, to do all that can be done, no matter how long it takes, for this project to restore at least the value of LUNA and or UST to its previous level of value (that would be the value on 5/8/2022).
- The day-to-day leadership shall provide a comprehensive review and potential plan to determine if the project can feasibly provide a mid term to long term recovery (no longer than 5 years) from monetization, or other sources, while still providing health to the project (since a healthy project is the greatest single factor to a mid to long term recovery of LUNA and UST value, thereby in and of itself recovering value). If a review shows that a plan can be made that could give greater value to recovery, than the health of the project alone would provide, to detail the plan to be presented to the governance community for a vote. This study and plan should be done within 3 - 6 months from the date of this proposal (if it should carry).
- That this project shall at the earliest possible availability, as would be considered reasonably possible, provide a diversified store of financial asset instruments to be used in reserve for UST (and any future stable coin projects), and that these reserves be adequate for catastrophic failure.
- That LUNA continue to be honored as the coin whose holders make up the governance membership.
- That an emergency plan be drawn up and reviewed every 6 months and presented to the membership for vote that deals with, at minimum, how the project will deal with financial pressure. This shall be specific, and where the white paper is not specific it shall complement it with further details ( https://assets.website-files.com/611153e7af981472d8da199c/618b02d13e938ae1f8ad1e45_Terra_White_paper.pdf ). If a vote fails to receive majority or quorem, the previous emergency plan shall remain in effect. No plan may go into effect, even if it passes, that shall violate fiduciary responsibility (in which case the previously accepted plan continues to prevail).
- The reserve levels, and what forms they take in terms of financial instruments, shall be published from time to time to the governance community, and at maximum made public in the summary form, at least once every 6 months.
- That reserve levels always keep enough liquidity on hand, or at least available, or that is backed by insurance (where available), to cover a full catastrophic disaster of either UST or LUNA (as soon as reasonably possible under the circumstances). It is recognized that this could be a long period of time and that recovery of value in LUNA and UST at this point is a main goal.
- That it is recognized that pools of LUNA and UST are diluted, and although representing a market cap of around 5B combined, that shrinking the amount of LUNA and UST in circulation, in a manner that does not disregard the financial ownership, buying power, or value of each respective coin, is a priority (as far as it is reasonable and responsible).
- That if either Proposal 1164 or 1169 does not pass, that the plan that is deemed by the community with the highest vote shall be placed into effect.
- That the protocol be updated so that the burn / mint rate between LUNA and UST be adjusted so that it responds to volume financial pressure of coin sales / exchange between coins on the Terra block chain (including bridging transactions), rather than be hard set. Once this item is done, it should replace Proposal 1164 and 1169 (whichever one was deemed by the community with the highest vote to be temporarily placed into effect).
- That the protocol be adjusted so that it never restrict purchases of LUNA or UST through the Terra blockchain, but that it does respond to volume pressure to limit sales so that it restricts the rate of sales (and the higher the volume the greater the time restriction) to help limit a run that would negatively impact the reserve and assets on hand for the project, or that would erode trust level.
- If day-to-day leadership feels that there is ever a time that it would be harmful to the Terra ecosystem, that the governmental communities’ desire is (should this proposal carry) to see the appropriate amount of financial supply of LUNA or UST purchased and held in reserve.
- That any specific guidelines, if any, regarding payment, or repayment, of LUNA or UST be made, or approved, by the governmental community, and in a manner that helps restore the project, as well as helps meet the fiduciary responsibilities of the project - since we recognize that restoring the project in full, over time, has the greatest potential for investors, community members, savers, and others to recover funds.
- That the community (if this resolution should pass - and probably many even if it does not), would like to recognize all the hard work that Do Kwon and TerraForm Labs have done, all the stress they have endured this past week, and all the efforts they have attempted to try to protect the project in its current form.
- That the community (if this resolution should pass - and probably many even if it does not), would like to recognize those who have gone through difficulties, financial disaster, and real life consequences that this situation has caused for many who invested as investors, and others who opened savings accounts backed by LUNA and/or UST. It has been a difficult time (and at least I can speak for myself in saying that I am praying for you all).
Finalized Proposal (Voting Is Open) - 5/18/2022 at 12:55pm UTC Time
- There are also a few other proposals out there that have merit - so make sure to read through them each.