Could TerraLuna restore TerraUSD PEG with $

2022年5月16日

Hi folks,

The #Terra protocol is doing well and needs no further bailouts 1-2-3 or whatever planned by Do Kwon. Now we have to let the market regulate itself naturally.

Indeed, the spectacular crash of the past week was painful for everyone. Nevertheless, I think it is part of algorithmic phases of the Terra protocol itself. The protocol grows by successive phases of expansion and contraction. We have simply witnessed a phase of brutal contraction. This phase could have been amplified by an hypothetical attack but no one knows right now.

Now, we have to wait for the market to do its job of natural regulator. Namely, slowly raise the #TerraLuna LUNA to the price of $0.0017 per unit. At that time, the #TerraUSD UST will naturally PEG with the US dollar. It’s only a matter of weeks. In fact, the regulator is already playing its role.

Once the market has played its role of natural regulator and therefore the TerraUSD UST will again be worth 1 US dollar thanks to its symmetry with the LUNA supply, we can begin the expansion phase of the Terra protocol.

During this expansion phase, we will see the TerraUSD UST supply increase and the #LUNA supply decrease. Once the PEG is reached, the decrease/increase of LUNA/UST will begin at approximately 612 LUNA for 1 UST until reaching in a more or less distant future the value of 1:1 or even more depending on the pace of adoption.

So, let the market regulate itself and digest this contraction naturally instead of trying to manipulate it with more or less hazy hypothetical rescue plans. This is the price to pay for a decentralized currency. Moreover, we are not safe in a distant future from a new contraction of the protocol which will resorb itself to leave after a few days or weeks a new phase of expansion.

Therefore, this contraction could be beneficial for all #cryptocurrency markets since it will bring a significant amount of fresh UST to the market when people will redeem their LUNA for UST once the PEG restore. And we know that cryptocurrency markets are in desperate need of fresh liquidities.

So, yes, I'm long. And the impressive volume of Terra Luna exchanged speaks by itself.

Have a nice day