The people that held Luna did it because they wanted a volatile asset to capture the amazing upside Luna has had until the attack. Those that held UST did so because they wanted an stable asset able to generate yield in a predictable manner. Both kinds of community members have been equally vital in the growth of Luna and both kinds should be compensated according to what they have lost.
My proposal, create Luna V2 and UST V2 (maybe rename both?). Make two snapshots and distribute the new tokens for those that held Luna or UST before the attack AND kept holding until whenever new tokens are distributed. Distribute to the holders according to the smallest amount they held when comparing the two snapshots:
- Example 1: Especulator Sarah had no Luna at the time of the attack but bought a gazillion at 0.000027. Shouldn’t receive anything.
- Example 2: Johnny Rekt, having lost confidence in the project and the team after the attack, sold half of his 30000 UST at 0.73 each (not a bad deal), so he should receive UST V2 according to the 15000 UST he had remaining.
if the priority is, paraphrasing Do Kwon:
“What we should look to preserve now is the community and developers that make Terra’s blockspace valuable – I’m sure our community will form consensus around the best path forward for itself, and find a way to rise again.”
Setting individual interests aside, It is pretty obvious that the community are those that held both before AND after the crash, be it Luna or UST, those that interacted with the chain, that had skin in the game before the attack,that kept believing in the project, the team and THEIR WORDS AND PROMISES, that remained patient awaiting a solution while seeing the bank run unfold in front of them.
The distribution of the new tokens should include the tokens held on chain, staked in the different protocols or providing liquidity in Terra or other L1s.
Should not include the tokens in centralised exchanges, as these are the ones that have been used to especulate, dump, and mess with the peg in general.
By the way, for Christ sake, who in the hell would allow perpetual trading in an stable coin?!
Protocols and devs of the ecosystem should be awarded also the new tokens depending of their previous holdings as outlined above, plus whatever incentives where initially planned.
Regarding UST v2 it should be collateralised, and it should be in the hands of community members more versed in tokenomics to determine the best design possible given the circumstances.
In my humble opinion, the best would be making UST overcollateralized (2x), 100% a basket of assets (including BtC and censorship resistant stable coins) + 100% Luna. Basically, something similar to USN of Near, but with extra focus on survival against attacks, regulations, etc.
If at the moment there are not enough reserves, The collateral could be partial, as long as it is designed to really keep the peg it would be easier in the current situation, for example, a basket of one third btc (where are the reserves?), one third stablecoins (where are the reserves?) and one third Luna, to allow scalability and incentives.
If fractionally collateralised, there should be a measures to raise the collateral as soon as possible, maybe developing a protocol like abracadabra money and mim but for UST.
The algorithm working as intended has led the protocol into a death spiral but is not the cause of it, it’s been human greed, lack of planning and preventive measures, slow reaction, and an unhealthy dose of ego.
That has nothing to do with the algorithmic nature of UST, and the catastrophe and resulting disgrace for thousands of people should be honoured learning the lessons and applying them, compensating the believers in the project instead of jumping to the next project with billions in the pocket and leaving behind the corpses.
Wishing you all the best.