After a night of turbulence on the UST and LUNA markets, Terraform Labs CEO and Terra blockchain founder Do Kwon broke his silence on Wednesday.
The cryptocurrency markets have been waiting for nearly 20 hours for him to announce an alleged "recovery plan," as promised in a tweet on Tuesday.
Kwon caters to the Earth community
In a new tweet on Wednesday, Do Kwon said, "I understand that the last 72 hours have been extremely tough for all of you," before reassuring the Terra community: "I know I am determined to work with each of you to overcome this. crisis and we will build our way out. Together".
"Before anything else, the only way to go will be to absorb the stablecoin offer that wants to come out before $ UST can start the repeg," he explained.
As a result, he stated that Terraform Labs (TFL) "approves community proposal 1164," a proposal that will essentially allow the Terra blockchain to absorb UST's supply more quickly.
"Of course," he added, "this comes at a high cost to UST and LUNA holders, but we will continue to explore various options to bring more external capital to the ecosystem and reduce UST oversupply."
He said other community proposals will also be discussed.
Kwon then promised that, as UST is rebuilt, its collateralisation mechanism will be adjusted and concluded his speech with an attempt to reassure sentiment within the Earth community.
"The Earth ecosystem is one of the most vibrant in the cryptocurrency industry, with hundreds of passionate teams building category-defining applications," he said. "As long as these builders, including TFL, keep building, we'll get out of it together."
The FSO and LUNA markets are not impressed
Kwon's “recovery plan” failed to inspire a significant recovery in the price of the UST algorithmic stablecoin, Terra's flagship. As of this writing, the currency continues to trade at depressed levels, around the quotation $ 0,30 as the start of the US trading session approaches.
Meanwhile, the UST supply wave, which according to Terra's mint-burn mechanism is subsequently converted into a LUNA supply wave, continues to weigh on the token. It recently dropped below the $ 2,0 mark, the lowest level since February 2021.
LUNA / USD has lost more than 97% of its value since the beginning of the week, when it was trading close to $ 65 per token, and fell more than 98% from its all-time high of near $ 120 printed at the beginning of the month. last.
As long as there is a backlog of USTs to convert to LUNA (where they will almost inevitably be sold soon after the conversion), the selling pressure on LUNA is unlikely to ease.
With the USTs now trading so much below their peg, the only hope many UST holders will have of redeeming the actual US dollar equivalent is to use Terra's mint-burn mechanism to convert UST in the same amount of USD as LUNA and then sell them immediately.
