MM 3.0.3 — Organic Revival of Terra Classic 
#USTC_Repeg #MakeDefiGreatAgain 
Phase-aware, auditable, DAO-governed blueprint to restore USTC peg to $1, recover protocol assets, and sustainably rebuild LUNC value. Technical spec + governance constitution + operational roadmap — publication-ready.
summary
MM 3.0.3 combines a continuous non-inflationary transaction tax (0.5%) with a conditional, reserve-aware AutoMint engine. All actions are governed by explicit phase caps, reserve-health checks, multisig + DAO ratification, and an on-chain blended VWMA oracle with robust fallbacks.
Core principles (non-negotiable)
* Tax flow (0.5%) is primary and non-inflationary; it funds burns, LP, recovery, legal/dev.
* AutoMint is conditional, conservative, and reserve-aware — not an unconditional supply lever.
* Freeze/Recovery actions require a documented legal-forensic evidence pack + DAO supermajority and multisig release.
* All parameter changes, mints, burns and large transfers are on-chain, auditable, and timelocked when required.
Phase ladder (24 months, default)
Seven phases: each phase has a target peg and a maximum tolerated deviation (phaseMaxDev). AutoMint and recovery actions respect phase caps.
|Phase|Target Peg|phaseMaxDev|Primary milestone|
| --- | --- | --- | --- |
|0|\$0.01 → \$0.02|1.00 (100%)|Recovery Router deployed; initial recoveries|
|1|\$0.04|0.80|USTC-BTC LP incentives live|
|2|\$0.08|0.60|Protocol pilots (Mirror/Anchor) start|
|3|\$0.16|0.40|DAO treasury scaling; legal filings active|
|4|\$0.32|0.20|Targeted LUNC compression & buybacks|
|5|\$0.64|0.10|TVL / CEX integrations|
|6|\$1.00|0.05|Yield lock; stabilization fund active ±5%|
## Economic architecture — Dual Funding
Design: two complementary flows.
1. **Tax flow (continuous, non-inflationary)** — 0.5% swap tax (user-visible). Atomically split and batched for gas efficiency.
2. **AutoMint (conditional)** — mints USTC only when: (A) blended oracle & phase checks pass, (B) ReserveHealth ≥ MinReserveHealth, and (C) DAO/multisig gating rules satisfied. Minted USTC is distributed atomically to prioritized buckets (stabilization first).
## Tax allocation (default)
Tax split (0.5% swaps): ``` • 40% Stabilization Fund (peg defence, market ops, buybacks) • 30% LP Provision (time-weighted adds to USTC-BTC, USD1-USTC) • 20% Protocol Recovery & Recap (Mirror/Anchor/wLUNA recovery) • 10% Legal & Development (forensics, audits, legal action, dev bounties)
Reserve model & peg formula (explicit)
Default reserve weights (DAO-tunable): BTC: 0.50, LUNC: 0.35, USD1: 0.15.
USTC_Peg ≜ (BTC_reserve_USD * 1 + LUNC_reserve_USD * 1 + USD1_reserve_USD * 1) / USTC_supply
ReserveHealth (RH): computed on-chain; range [0,1]. Example formula (implementable):
RH = min(1, (w_BTC * BTC_liquid_USD + w_USD1 * USD1_liquid_USD + w_LUNC * LUNC_liquid_USD * discount_LUNC_vol) / ReserveTargetUSD)
Defaults: w_BTC=0.50, w_LUNC=0.35, w_USD1=0.15, discount_LUNC_vol=0.5, ReserveTargetUSD = targetCoverage (DAO parameter). AutoMint requires RH ≥ 0.20 by default.
Oracle design — defence-in-depth
Blended on-chain VWMA with multi-provider fallback.
BlendedPrice = 0.70 * VWMA_7d + 0.25 * VWMA_200blk + 0.05 * CrossChainFallback
Implementation rules:
- Trim top/bottom 2.5% of volume samples to reduce outliers.
- If provider disagreement > 3% for > 180s → alert, shadow-mode (do not AutoMint) and enable internal median fallback (on-chain DEX median) for monitoring.
- Oracle health score computed and exposed on-chain; AutoMint requires minimum oracle health.
AutoMint kernel — deterministic pseudocode
Defaults (consistent): MaxMintFracPerCall = 0.005 (0.5%), SoftCapPerCall = 200,000,000 USTC, MinReserveHealth = 0.20. phaseMaxDev = {1.0,0.8,0.6,0.4,0.2,0.1,0.05}.
Mint distribution & prioritized sinks
Every minted USTC call performs atomic distribution in this priority:
- Stabilization Fund (40%) — market ops, immediate buybacks, reserve reconstitution
- LP Provision (30%) — time-weighted LP adds to reduce slippage
- Protocol Recovery (20%) — Shuttle/Bridge bids, wLUNA buybacks, protocol recap purchases
- Legal & Development (10%) — audits, legal actions, milestone-based development
Tax pool follows same proportions but tax revenue always funds burns/LP first; AutoMint supplements when recovery assets available and RH healthy.
Freeze & Recovery (legal-safe design)
Freeze & Re-Mint is legally sensitive. MM 3.0.3 implements a conservative, defensible workflow:
- Suspicious address identified via forensics and community reporting.
- Evidence Pack required (on-chain trace + third-party forensic report + chain-of-custody PDF).
- DAO Proposal & 14-day public review. Supermajority ≥70% of voting stake required to freeze.
- Owner Proof Window (30 days) to submit counter-evidence.
- Re-mint to Recovery Router only after second ≥70% vote and legal counsel verification (external counsel + community auditor).
- All actions recorded on-chain; recovery transfers require multisig + DAO ratification for amounts > Threshold_X (DAO sets X).
Rationale: this protects against abuse and increases legal defensibility for cross-jurisdiction claims.
Recovery Router & multisig architecture
Two-layer control reduces capture risk:
- Operational Vault (MPC multisig 5/9) — handles routine small releases & LP ops (with DAO parameterized daily limits).
- Oversight Council (11 members; release policy 7/11) — signs large transfers; any transfer above OversightThreshold requires DAO ratification and timelock.
Governance constitution (proposed, anti-capture)
| Action | Quorum | Approval | Timelock |
|---|---|---|---|
| Ordinary proposals | 15% | >50% | 72 hours |
| Economic / treasury params | 25% | ≥66% | 7 days |
| Freeze / Re-mint / Recovery transfers > Threshold | 33% | ≥75% (or ≥70% for freeze) | 14 days |
| Constitutional amendments | 33% | ≥80% | 28 days |
Additional anti-capture rules: large stake inflows trigger cooldowns; delegations have cooldowns; parameter changes affecting multisig or recovery require supermajority + external audit signoff.
Security, audits & monitoring checklist
- Trail of Bits + Halborn full-scope audits (oracle, mint, tax handler, recovery router).
- Formal verification for atomic mint/distribute/burn paths where feasible.
- Shadow oracle deployment (7+ days) before mainnet activation; publish logs.
- On-chain telemetry: oracle health, reserve health, mint logs, tax inflows, LP depth — public dashboards.
- AI anomaly detection (Sybil / wash patterns) feeding voter/incentive modules.
Gas & UX — unified fee handler & batching
Design: split user-visible fee into validator gas portion and tax portion on-chain. Tax pool distributions are batched hourly to reduce gas and optimize LP slippage.
Risk register — concise
| Risk | Mitigation |
|---|---|
| Oracle manipulation | VWMA blend + trimming + multi-provider fallback + auto-pause |
| Runaway minting | MaxMintFracPerCall + SoftCap + ReserveHealth + DAO gating + emergency auto-pause |
| Legal/CEX refusal | Justice fund, coalition building, forensic evidence packs, public pressure |
| DAO capture | Quorum rules, timelocks, delegation cooldowns, transparent dashboards |
Simulation & transparency requirements
Every parameter change must be accompanied by an off-chain simulation report (published in PR) showing model runs for low/medium/high inflows and reserve states. Example sources for evidence & references:
- Discourse proposal thread: official-proposal-mm-3-0
- Recovery / community resources: Lunc Goblins Discourse
- Explorer example: example tx
- Terra Classic portal: terra-classic.money
Operational roadmap — first 90 days (concise)
- Publish PROPOSAL.md + this HTML in GitHub repo & open Discourse summary (1-pager + deep spec).
- Deploy shadow blended VWMA oracle (7–14 days) and publish logs.
- Deploy Recovery Router & operational multisig on testnet; run forensic freeze/remint dry runs.
- Run AutoMint module on testnet with stress scenarios (simulate up to $1B/day volume).
- Commission audits; open developer bounty program for oracle/mint modules.
- DAO parameter vote to enable Phase 0 (post-audits & shadow oracle stable).
Audit checklist (for auditors)
- Oracle feeds: sample ingestion, trimming, fallback, health scoring.
- AutoMint: parameter boundaries, caps, ReserveHealth checks, atomic distribution correctness.
- Tax handler: fee splitting, batching logic, edge-case tests.
- Recovery Router: multisig policy, timelock integration, evidence-pack verification workflow.
- Formalization of legal workflow: ensure freeze/remint flow emits auditable records.
KPIs & targets (12 months — example)
| Metric | Current (example) | Target |
|---|---|---|
| TVL | $10M | $200M+ |
| LUNC supply (circulating) | 6.8T | ≤4.2T (3-year target) |
| USTC peg stability (% days within ±5%) | ~60% | ≥90% |
| DAO participation | ~18% | ≥40% |
MM 3.0.3 — Publication draft. Implementers: ensure legal counsel reviews freeze/remint workflows for each jurisdiction before executing cross-chain asset recovery. All code in production must pass independent audits and formal verification where feasible.