Proposal for Restoration in Accord with the First Principles of Reality

General
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Proposal for Restoration in Accord with the First Principles of Reality

  1. Reasons for the failure of Luna/UST:
    (1) Luna/UST lacks a corresponding value foundation;
    (2) Unlimited supply of Luna/UST;
    (3) Luna/UST arbitrage is unsustainable;
    (4) A 20% stake is unsustainable.
  2. The original purpose of stablecoins in the blockchain world:
    (1) From a transactional perspective, stablecoins are unnecessary, as all blockchain tokens serve the purpose of trading;
    (2) Debate One: Stablecoins are designed to link to fiat currencies and provide nominal pricing for blockchain tokens;
    Debate II: Stablecoins are designed to secure rights and ensure that participants can hold their share of blockchain tokens without loss.
  3. Regarding the debate on
    Algorithmic stablecoins are destined to and must fail, as they go against human nature and objective laws;
    If Luna/UST is to be restored from this perspective, it is impossible and unsustainable.
  4. Regarding the second argument
    Stablecoin with Rights Confirmation Algorithm: This proposal primarily elaborates on the aspect of rebuilding rather than restoring Luna/UST.
    (1) Current Situation: The chances of Lunc/USTC recovery are slim; similar over-collateralization risks exist, such as with DAI.
    (2) Reconstruction Proposal - Recasting the UST
    Based on community interests, the currently floating USTC should remain fixed, and its price should be considered as debt;
    How to recast it?
    (1) A fixed quantity is cast on schedule, and the component currency cost prices in bull and bear markets are fundamentally different;
    (2) It should be collateralized; for example, 1UST = 1USTC + a basket of major cryptocurrencies (community vote), where 1USTC serves as the dynamically adjusted currency;
    (3) The sustainability of arbitrage: Establishing on-chain decentralized exchanges (HYPE and ASTER have been successful), with transaction fees serving as the upper limit for continuous arbitrage. Arbitrage should not be baseless; reasonable arbitrage opportunities are essential;
    (4) Destruction should be orderly; a spiral decline is a trampling of value.
    In short, the current USTC serves as debt repayment, while the new UST is a hybrid stablecoin, and arbitrage is sustainable.