Terra to burn $1.4B UST and stake 240M LUNA to stop the bleeding

The Terra rescue story continues to unravel. In a tweet thread, the Terra Money Twitter account went into greater detail regarding the CEO of Terraform Labs, Do Kwon's rescue plan for UST.

The thread sheds light on Proposal 1164, Do Kwons initial strategy for Terra from May 11. The proposal would better balance the algorithmic stablecoin UST by expanding the base pool for the currency. The proposal has received 220,000 votes, at over 50%.

The tweet thread also explains that there is a supply overhang of UST which explains LUNAs dilution (or price depreciation). As a result, now they must burn more UST:

The primary obstacle is expelling the bad debt from UST circulation at a clip fast enough for the system to restore the health of on-chain spreads.

Consequently, there are three emergency measures to be implemented, one of which focuses on burning more UST:

3/ TFL is also initiating three more emergency actions:

1. Proposal to burn the remaining UST in the community pool.