What is the real reason for the collapse of the stable UST currency? And you’re going to get it back?
Suppose luna’s currency price is $1 billion, in which case someone can shed a billion UST by burning one LUNA currency. Then let’s say luna’s price drops to $1 for no good reason; this person can replace his UST with 1 billion luna coins!
Suddenly and again, for no good reason at all – luna’s other traded currencies are flooded into the open market. This is, in essence, what is happening today.
So let’s go back to Luna Foundation Guard UST, which has the same dynamics as many other algorithmic stable currencies, except that they also have LFG.
In other words, UST is installed by:
- Contracts.
- The enormous gravity created by the size of Do Kwon nuts.
LFG was previously responsible for anchor bootstrapping strategy:
Take LUNA’s safe, sell it, and fill in the anchor protocol reserve (the large fund that pays 20% to UST stores).
Every other economic fund in L1 does things like this less directly.
What happened?
- Burn UST for storage.
- Luna’s price will go up.
- Sell more LUNA to fund the protocol reserve.
This has led in the long run :
- UST kicks off as a stable and widely used currency before LFG funds run out.
- Luna dollar currency price goes to the moon.
- And everyone’s happy!
All this happened in January when Degen Box collapsed.
This internal explosion led to a significant push for the use of UST in a 10-digit multi-chain ecosystem headed by Daniel Sista.
Jump, 3AC, and others met here in Luna OTC’s $1 billion deal to buy Bitcoin.
The story behind it?
- Get the Bitcoin gang on board (every cycle needs a crazy billionaire to work hard for the king)
- Give recovery operations the ability to replace UST with BTC as well as replace UST with pre-existing LUNA.
Now there’s a whole weekend of giant 9-digit moves that sell UST and press the currency peg.
As with all stable algorithmic currencies, the downward cycle is the opposite of the upside:
- Cancel stack UST and its descent.
- Disengagement in THE US dollar due to downward pressure.
- UST holders replace their currencies against LUNA according to the replacement mechanism initially described.
- A dump occurs on Luna currency.
