May 12, 2022 09:47
Terraform Labs CEO and Terra blockchain pioneer Do Kwon broke his silence on Wednesday, after a night of volatility in the UST and LUNA markets.
Markets had been expecting him to present an alleged "recovery plan" as promised in a tweet on Tuesday for over 20 hours.
Kwon speaks to the Terra residents.
"I realize the past 72 hours have been tremendously difficult for all of you," he added in a fresh Twitter thread on Wednesday, before promising the Terra community that "I am committed to work with every one of you to weather this crisis, and we will build our way out of this." Together.”
"Before $UST can start to repeg, the only road ahead will be to absorb the stablecoin supply that wants to go," he stated.
As a consequence, he said that Terraform Labs (TFL) "endorses the community proposal 1164," which would enable the Terra blockchain to absorb the UST supply more swiftly.
"Obviously, this comes at a great cost to UST and LUNA holders," he continued, "but we will continue to investigate alternative strategies to bring in additional external money to the ecosystem and minimize UST supply overhang."
Other community recommendations, he added, will be examined as well.
Kwon went on to say that once UST is rebuilt, the collateralization method would be tweaked, and he ended his post by trying to calm down the Terra community.
"With hundreds of dedicated teams producing category-defining apps inside the Terra ecosystem, it is one of the most vibrant in the crypto business," he added. "We will emerge out of this together as long as these builders, including TFL, keep building."
The price of Terra's flagship algorithmic stablecoin UST has not recovered as a result of Kwon's "recovery plan." As the start of the US trading day approaches, it continues to trade at low levels in the $0.30 range.
Meanwhile, the influx of UST supply, which is then turned into LUNA supply thanks to Terra's mint-burn process, continues to weigh hard on the token. It just dropped below $2.0 for the first time since February 2021.
LUNA/USD has lost almost 97 percent of its value since the beginning of the week, when it was trading at $65 per token, and is down over 98 percent from its all-time high near $120 at the beginning of the month.
The selling pressure on LUNA is unlikely to diminish as long as there remains a backlog of UST to be converted into LUNA (where it will almost certainly be sold soon after conversion).
With UST trading so much below its peg, many UST holders will have no choice but to use Terra's mint-burn mechanism to convert their UST into the same USD amount of LUNA and then sell it immediately.
May 12, 2022 09:58