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Key facts:
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At the time of this publication, the proposal has 99.44% approval.
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MOON investors massively sell their coins and cause their price to fall.
A proposal to save TerraUSD (UST), the algorithmic “stablecoin” that has lost its value in recent days, has been launched on the Terra ecosystem governance platform. This consists of burning the money that the Luna Foundation has as a reserve and the one that is on a bridge with the Ethereum network. To do this, it is necessary to emit an equivalent amount of terra (MOON), which would significantly increase its circulating.
The foundation of the proposal 6837 is that “the removal of a significant portion of UST’s oversupply will relieve much of the parity pressure on UST.” In other words, by reducing the supply of the currency, they want their demand to increase and thus the price can regain parity with the US dollar.
Days ago, CriptoNoticias detailed how the process of emission and destruction (or burning) of UST is. Basically, to issue 1 UST it is necessary to burn a similar amount (measured in fiat money) of MOON. The same thing happens in the opposite direction: to burn UST it is necessary to emit a similar amount of MOON.
If the proposal is approved, almost 1.4 billion UST would be burned (10% of those in existence), of which just over 1,000 million correspond to the reserves of the Luna Foundation and 371 million are from the bridge with the Ethereum network. Likewise, a similar amount of MOON would be created (the number will vary according to its price at the time of the operation).
A terminal condemnation for the price of LUNA
An inflationary measure of such magnitude it could be a death sentence for the MOON price, preventing any possibility of recovery.
Investors seem to have understood this and, since the proposal began to be rumored, they sought to massively get rid of their coins, which led to their price (which was close to USD 1) up to USD 0.02 at the time of this publication.
The voting is already underway. All addresses that have LUNA staking on the Terra Station platform can participate. So far, the “yes” is imposed with 99.44% of the votes. The abstention rate is 0.55% and the percentage of voters who oppose it is negligible.
As CriptoNoticias announced yesterday, the plan to save UST also includes its collateralization with other assets. That way, it would stop being a 100% algorithmic cryptocurrency and acquire a functioning that perhaps resembles that of other stablecoins, for example, DAI.
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