Proposal: LUNC Forex Collateralized Stablecoin Module (CSM) VerSion 2

[LuncEComunity23]

Rebuilding Global Confidence in Terra Classic through Real-Asset Collateralized Forex Stablecoins

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1. Introduction

Terra Classic was once known for its ambition to bring decentralized stable assets to the world. This proposal marks the next evolution — transitioning from the legacy algorithmic Market Module (MM) to a Collateralized Stablecoin Module (CSM) that anchors value in fiat-backed and asset-collateralized stablecoins, beginning with EUTC, and expanding step-by-step into a global Forex ecosystem of 7.5 trillion $ of daily trading volume. Stablecoin market at the moment is a 50-150 billion $ daily trading volume.

The goal:

Rebuild stablecoin utility safely.

Create on-chain arbitrage and volume.

Reignite global adoption — starting in the European market, and expanding to Asian and emerging gold-based markets.

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2. Phase 1: Controlled Launch with Low-Supply Currencies

We begin gradually, focusing on low-supply, high-utility fiat stablecoins to limit systemic risk and test the CSM framework.

Phase 1 Assets

Stablecoin Region Initial Mint Cap Collateral Source

-EUTC Euro 50000/day Vaulted stablecoin reserves

Each minted stablecoin must be fully collateralized by a combination of:

• Vaulted collateral - whitelisted stablecoins like USDC USDT or PAXG to come with stable route)

• Dynamic mint cap to throttle growth and reduce exposure during initial rollout.

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3. Phase 2: Expansion Toward the Asian Markets

Once EUTC repeg and collateralized, the next strategic expansion targets Asian reserve-driven markets and low cap stablecoins.

Planned Additions

Stablecoin Region Strategic Rationale

1. HKTC

   Hong kong dollar -

   36.4k supply

   total value at peg 4,677 USD

2. NOTC

   Norwegian Krone

   31,028 supply

   total value at peg 3,026 USD

3. PHTC

   Philippines Pesos

   207,349 supply

   total value at peg 3,527 USD

4. JPYTC Japan Trusted fiat in Asia, strong trade volume

5. CNYTC China Gold-backed expansion synergy

6. SGDTC Singapore Crypto-friendly regulatory environment

7. AUTC Australia Gateway to Oceania and Pacific trade routes

These expansions build the LUNC Forex Network, providing native liquidity for global trade and on-chain Forex swaps directly within the Terra Classic ecosystem.

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4. Pool Pairing Strategy

Every CSM stablecoin will launch with dual-pair liquidity to guarantee on-chain utility and arbitrage opportunities:

• Stablecoin/LUNC (primary anchor pair)

• Stablecoin/USTC (stabilization and repeg utility)

Example:

• EUTC/LUNC

  EUTC/USTC

This design ensures every Forex stablecoin generates both arbitrage pressure and utility volume for LUNC and USTC simultaneously.

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5. Fees and Risk Mitigation

To ensure sustainability and reduce exploit potential, the following dynamic fees will apply during the initial deployment phase.

• 2% Mint Fee → sent to community pool and reserve vault, buys back and vault USTC and LUNC and funds oracle pools

• 4% Redeem Fee → prevents rapid cycling and arbitrage abuse and fund all the above as well 2x

• Daily Mint Cap: adjustable parameter by governance to manage risk exposure and collateral depth. A % of liquidity available in the pools should be in place to prevent being drained. As liquidity grows so does mint caps.

This approach guarantees controlled growth while ensuring continuous community funding.

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6. Required Upgrades and Module Adjustments

To implement this proposal, the following upgrades are required:

6.1 Market Module → Collateralized Stablecoin Module (CSM)

Replace the current Market Module’s algorithmic mint/burn mechanism with a CSM that requires verifiable collateral backing before minting.

• Mint = Deposit USDC/USDT collateral to Vault

• Redeem = Burn stablecoin + pay redemption in USDC

6.2 Fiat Price Oracles

Onchain oracle live fiat prices

• USD, EUR, GBP, JPY, CAD, SGD, AUD, CNY and more.

Ensures real-time (30 sec refresh), accurate conversion and mint ratios.

6.3 Vault Infrastructure

A smart vault system will:

• Lock collateral (USDC USDT, PAXG, etc.)

• Maintain over-collateralization ratios 101-103%

• Track minted outstanding supply

• Automatically rebalance mint caps based on collateral depth and volatility

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7. Economic Impact

• Increases on-chain volume via LUNC + USTC pools.

• Adds new minting/burning pathways tied to real-world fiat demand.

• Restores trust in stablecoin minting via full collateralization.

• Positions LUNC as the global bridge asset for multi-currency swaps.

This model transforms Terra Classic into a global DeFi Forex hub, capable of hosting pegged assets for all major currencies while sustaining LUNC’s deflationary momentum.

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8. Governance Parameters

Parameter Default Adjustable by Gov

Mint Fee 2%

Redeem Fee 4%

Daily Mint Cap % liquidity pools

Collateral Ratio 101-103%

Oracle Source onchain fiat oracle

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9. Vision: LUNC as the Decentralized Forex Hub

By integrating fiat-priced, collateralized stablecoins directly into the Terra Classic economy, this proposal:

• Creates a decentralized Forex exchange layer on-chain.

• Brings real-world trade liquidity to LUNC.

• Positions Terra Classic as the chain of choice for currency-backed DeFi assets.

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10. Conclusion

The LUNC Forex CSM proposal revives Terra Classic’s original vision—this time with real collateral, transparent mechanics, and risk-controlled scaling.

Starting with EUTC, we build credibility through gradual growth, then scale outward into global currencies and Asian markets, ensuring LUNC once again becomes the beating heart of a decentralized, cross-currency financial system.

Wed need :

150K usd in liquidity:

75k in USDC and 75K in LUNC + USTC

(75k usdc to mint eutc(comes back as vaulted collateral)

• 2 pools per dex:

  EUTC/LUNC 35k

  EUTC/USTC 15k

For following stablecoins:

we have 3 tier of stablecoins and we deploy respective amount of liquidity/tier on all 3 dexs

• Tier 1 top 10 fiat currency 50k / dex

  Tier 2 emerging fiat currencies 20k / dex

  Tier 3 evolving currencies and metals 10k / dex

  Tier 4 micro markets 5k / dex

Dev work:

-Adjusting MM parameters

-Vault for collateral

-whitelist admin wallets for swapping and trading

-oracle intergration and testing (every 30 sec)

- “kill switch” in case of extraordinary market conditions to shut down mint redeem functionality.

-estimate work time 2-3 months

Signed

Lunverse Validator & DO Cookie

[BiNodes]

After evaluation and analysis, we oppose this proposal for the following reasons:

1. Using US - dollar assets as collateral to issue non - US - dollar assets (such as EUTC), while only requiring a collateral ratio of 101 - 103%. This fails to take into account the volatility of the foreign exchange market, and it is possible to become insolvent in an instant.

2. A 4% redemption fee will cause stable - coin arbitrageurs to enter the market after diluting costs. Considering the emotional value, the swing range of the stable coin during this period may exceed 10%, leading to another de - pegging crisis.

3. The real - time price fluctuations of the euro are in milliseconds, and the 30 - second on - chain oracle creates a huge arbitrage space.

4. The proposal claims to be based on real assets, but in fact, it uses USDC/USDT as collateral instead of directly holding euros, which creates a double - risk situation.

5. An initial liquidity of $150,000 and the subsequent continuous capital investment pose a huge challenge to the current ecosystem. Moreover, it fails to explain why users should choose Terra’s stable coins instead of USDC/USDT.

In conclusion, we believe that implementing a system with such high difficulty, large costs, and significant risks in the current system environment may further damage the ecosystem and waste resources, without bringing the expected positive results.

[LuncEComunity23]

Thank you for your opinion and Vote to that, we Respect every view or decisions.

[uanrak]

BiNodes I don’t really understand the reasons why you oppose the proposal without offering new mechanisms or conditioning your vote on solving the issues you mention.

1. Can’t we propose a higher level of collateralization using USD-linked tokens and EUTC? Can’t we add strong initial collateral from other tokens to reinforce the initial liquidity? Can’t we condition EUTC minting on obtaining additional collateral through the commissions? Can’t part of the commissions be used to acquire assets pegged to the value of the EUR?

2. Can’t we introduce a dynamic redemption fee to prevent excessive price deviations by increasing or decreasing that fee? Can’t we build a fund (using commissions, for example) dedicated to arbitrage to reduce price impact?

3. Is there really no way to improve the oracle frequency? Can’t we adjust the fee structure to discourage aggressive arbitrage?

4. As I said in point 1: can’t we increase the variety and level of collateralization to address that issue?

5. Can’t the system grow only as the reserves—funded by commissions—fill up and collateralize the token? Can’t the initial capital come from external investors in exchange for incentives (that don’t compromise the ecosystem)? Or at the very least, can’t we start with a smaller initial liquidity pool without adding external capital beyond commissions, simply to test how the system behaves?

None of these are proposals—just a small fraction of all the possibilities available to make the system more robust before scaling it, and to eliminate potential design problems.

What’s clear is that the LUNC ecosystem urgently needs to increase its utility. That’s why I think it’s important to explore how to properly develop a proposal that improves its utility. Rejecting any idea outright—without conditions, nuance, or alternative suggestions—just because it isn’t perfectly implemented from the start doesn’t help us move forward.

[BiNodes]

uanrak The doubts you raised imply that validators do nothing. But believe that the revival of LUNC is even more crucial for most on - chain validators, as they have not only invested money but also spent a great deal of energy building node infrastructure.

Similar topics are discussed every day. When there is a well - thought - out plan, a formal proposal will be put forward. Things are not as simple as you think. Do you think you can just pontificate in the comment section?

Every day, there are investors who go bankrupt due to the price and blame validators for doing nothing. Why should validators pay for your bankruptcy caused by your own greed?

Moreover, timing is more important. Sometimes, building up strength is more important than making random moves.