Terraform Labs plans to be pivotal in re-pegging the UST to the US dollar.
Terraform Labs announced on Thursday three new emergency measures to save the LUNA and UST stablecoins. To protect against network governance attacks, the company has proposed burning all UST in the community pool, burning the remaining 371 million UST cross-chain on Ethereum, and staking 240 million LUNA.
Terra outlined plans in a tweet thread to prevent severe dilution of LUNA and restore the UST peg. The tweets also explained Do Kwon’s 1164 proposal to increase the size of the base pool and burn UST. The proposal received 450 million votes, with the majority supporting it.
Terraform Labs has begun implementing emergency measures to save LUNA and re-peg the UST. Under its Agora proposal, the company intends to burn over 1 billion UST in the community pool and the remaining 371 million UST cross-chain on Ethereum.
“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 LUNA to defend from network governance attacks.”
Terraform Labs will burn the UST that was on Ethereum as a liquidity incentive. The company is also looking into the best ways to increase the burn rate of the remainder of its UST holdings.
The company intends to strengthen Terra’s economy and prevent governance attacks by staking 240 million LUNA.
The implementation of all three measures will help to fix the system’s on-chain swap spreads, which will hopefully peg UST again.
Meanwhile, Terra Analytics reports that on May 12, the circulating supply of LUNA increased by 4.355 billion. Furthermore, over a billion have been issued in the last two hours.
While Treasury Secretary Janet Yellen recently criticized risks in Terra’s UST stablecoin, the Securities and Exchange Commission (SEC) is said to be investigating UST.
The UST de-peg to the US dollar and the LUNA price drop in two days may have prompted the SEC to intervene. Furthermore, the involvement of money managers and the possibility of a coordinated attack on the blockchain may prompt the SEC to conduct an investigation.
