On May 12, Terra (UST) officially tweeted that the peg pressure caused by the current oversupply of UST is seriously diluting LUNA. At 10:00 a.m. on May 12th in Beijing, the daily increase in the circulating supply of LUNA has reached 186 million pieces, and the total circulating supply has reached 1.525 billion pieces.
Several measures are currently being taken to control this phenomenon:
The first is to launch Proposition 1164, which expands the base pool size and accelerates the burning rate of UST, helping to narrow the on-chain spread.
Secondly, TFL (Terraform Labs) has also launched three other emergency operations:
1. Propose to destroy the remaining UST in the community pool;
2. The cross-chain 371 million UST on Ethereum will be destroyed on Ethereum.
3. Stake 240 million LUNA to defend against cyber governance attacks.
After three emergency deployments, 1,388,233,195 UST will be destroyed, accounting for about 11% of the supply, which will effectively reduce the bad debt of UST and ease the anchoring pressure of UST.
In addition, voting on the full Agora proposal to destroy the remaining part of the UST in the community pool (including the proposal to destroy the cross-chain UST) will be launched soon.
During execution, TFL will port back to Terra the remaining UST that has been deployed on Ethereum (371 million UST) over the past few months as a liquidity incentive, and use the burn module to burn it all before the outcome of the governance proposal.
As can be seen from these measures, TFL is currently exploring the best ways to destroy its remaining UST holdings, which are intended to absorb the selling pressure of UST in various open markets.
The tweet also stated that eliminating system bad debts through the aforementioned projects would help restore on-chain transaction spreads to meaningful levels, thereby significantly reducing peg pressure on UST. The process will be expedited once the new base pool proposal is passed.
Finally, it is also clearly indicated that “TFL has been continuously researching solutions and potential ways to help affected users stop bleeding for the past four days during the operation.”
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/tfl-is-taking-emergency-measures-to-clear-ust-bad-debts/
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