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Do Kwon Reveals Plans to Restore Terraform Stablecoin

Increased minting capacity leads Terraform CEO’s grand plans.

In response to Terra’s devastating decline this Monday, co-founder, Do Kwon promised to work alongside users in resolving the crisis. 

Since Bitcoin’s accelerated dip began on Monday, UST has dropped to $0.7, then $0.48. Its present price is less than half its originally designated price peg. LUNA in turn has tanked by more than 90% in the past day. 

Holders of the beleaguered digital asset hurried en masse to liquidate UST in response to the unfortunate incident. LUNA’s devastating drop was the result.

On Wednesday, the defiantly optimistic CEO’s response to this turn of events came in form of a Twitter thread. In it, he revealed his plan to increase the rate at which failing stablecoin is absorbed in advance of a $UST repeg. This idea hinges on a proposal to increase the daily minting capacity of LUNA.

Let’s Take a Little Step Back

The Terra stablecoin UST has long been the subject of noteworthy interest in the crypto community. Its co-founder’s novel idea of backing it with Bitcoin instead of the traditional USD was met with mixed reactions. Regardless many Bitcoin enthusiasts were thrilled about the idea and the nature of Do Kwon’s bet.

While a horde of other plebs predicted that it would crash sooner rather than later. CEO Do Kwon of course was confident and often mocked his detractors. Fast forward to Monday and the famously brazened Kwon understandably changed his tune as Terra almost plummeted out of the top leagues. 

Do Kwon’s Redemption Plan

In his Twitter thread, Do Kwon outlined the steps he is taking to assist the peg system in the absorption process.

The suggested measures include, one, to significantly reduce the Pool Recovery Block. Kwon proposes halving the block from 36 to 18 while doubling the Basepool parameters from 50m to 100m SDR. More importantly, however, the CEO suggests the endorsement of Proposal 1164 so as to raise minting volume to $1200M from its previous $293M. $1200M is of course $1.2 billion, but the former perhaps embodies Do Kwon’s fiercely optimistic post. 

Once the mint volume increase is achieved, Do Kwon says the on-chain spread will begin a healing process. That coupled with the new burn rate should reduce the UST supply overhang and conceivably restore equilibrium to Terra.

Furthermore, the CEO promised to make changes to the UST system to ensure that UST has proper backing in the future.

Since Do Kwon’s tweets, LUNA’s price has more than quadrupled from a staggering low of $0.86 to $4.24 at present.  In the spirit of “holding on”, Do Kwon implored Terra enthusiasts to be patient and has promised that the community is “gonna keep making noise.”

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