Terra Announces New Emergency Measures To Support LUNA And UST
Terraform Labs on Thursday said it has proposed three new emergency measures to save LUNA and UST stablecoin. The company has proposed to burn all UST in the community pool, burn the remaining 371 million UST cross-chain on Ethereum, and stake 240 million LUNA to protect from network governance attacks.
Terraform Labs to increase UST burning and stake LUNA
Terra in a tweet thread outlined plans to prevent the severe dilution of LUNA and restore the UST peg. The tweets also explained Do Kwon’s 1164 proposal to expand the base pool size and burn UST. In fact, the proposal has received 450 million votes, with the majority in favor.
Terraform Labs has started implementing the emergency measures to save LUNA and re-peg the UST. The company aims to burn over 1 billion UST in the community pool and burn the remaining 371 million UST cross-chain on Ethereum under its Agora proposal.
“TFL is also initiating three more emergency actions: 1. Proposal to burn the remaining UST in the community pool. 2. TFL will burn the remaining 371 million UST cross-chain on Ethereum. 3. TFL just staked 240 million LUNA to defend from network governance attacks.”
The UST which was on Ethereum as liquidity incentives will be burned by Terraform Labs. It also says the company is currently exploring the best ways to increase the burn rate of the remainder of its UST holdings.
With the staking of 240 million LUNA, the company aims to strengthen Terra’s economy and prevent governance attacks.
The implementation of all three measures will help fix the on-chain swap spreads on the system, which will hopefully peg UST again.
Meanwhile, Terra Analytics has revealed that the circulating supply of LUNA increased by 4.355 billion on May 12. Moreover, more than 1 billion have been issued in the past two hours.
Is the SEC Investigating Terra?
While Treasury Secretary Janet Yellen recently criticized risks in Terra’s UST stablecoin, the Securities and Exchange Commission (SEC) is rumored to have started an investigation against UST.
The de-peg of UST with the US dollar and LUNA price falling in just two days may have brought the SEC into the scene. Moreover, the involvement of money managers and the possibility of a coordinated attack on the blockchain could also spur the SEC to investigate.
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