Investing.com – The developer of (LUNA) Do Kwon had already announced yesterday that it would draw up a rescue plan for the .
He certainly hoped that this simple announcement would contribute to some stability, but it did not. Thus, hour after hour, the two cryptocurrencies continued to deepen their losses.
In the meantime, the rescue plan was presented to the community on Twitter (NYSE:). Do Kwon first apologized that the past 72 hours had been very nerve-wracking for everyone involved. At the same time, he indicated that it was possible to overcome the crisis, but it could only be done together.
The problem with the current situation is the algorithm-based price stabilization mechanism. This is responsible for reducing the supply of UST when the price falls below 1 dollar. However, the move away from this magic mark accelerated so much that the on-chain swap spread reached 40 percent, which strongly affected the price of LUNA.
Do Kwon believes that a rescue attempt can only be successful when everyone who currently wants out sells the TerraUSD.
Once this is done, the basic pool can be increased from 50 to 100 million SDRs, while the PoolRecoveryBlock will be reduced from 36 to 18. The mining capacity for Luna thus increases from 293 to 1,200 million. The price stabilization mechanism will then absorb the USTs for sale more quickly and the way to parity will be open.
The success of this operation will depend in particular on the community itself, as they will now vote on whether the rescue plan will be implemented under this shape.
By Marco Oehrl