Three gov proposals (#11, 12, 13) got dropped on overnight - their passage is crucial to making Terra more useful so here's to making them easy to understand:
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1/ The Terra Protocol defines an algorithm whereby a family of stablecoins can remain stable against an arbitrary set of price indices (in this case, 5 fiat currencies) by allowing them to be swapped with the Luna staking token at par. 1 UST = $1 worth of Luna at all times.
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2/ Problem: swaps are currently too expensive. The protocol charges a fee (min_spread + X), where X increases quadratically as swaps become skewed to one side (think , but protocol is the counterparty in every trade.
docs.terra.money/dev/spec-marke
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3/ Proposal 11 reduces min_spread to 0.5% from 2%. Proposal 12 increases the liquidity pool provided by the protocol by 3 x, such that the system can handle 3x volume of skewed trades for the same slippage.
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4/ 11 and 12 increases the liquidity for Terra stablecoins, and makes them much more useful. Easier to redeem, unlocks more usecases that demand higher volume.
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5/ Why now? These liquidity parameters were set on network genesis when both Terra and Luna were listed on a handful of exchanges and had < $1M daily trading volume. Now liquidity has increased ~20x, so a 3x liquidity is actually quite moderate.
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6/ EJ from Terra Research has done in-depth analysis to make sure the system will not get run over by the lower fees. Read about his work here:
Prop 11: agora.terra.money/t/proposal-to-
Prop 12: agora.terra.money/t/proposal-to-
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7/ Prop 13 brings smart contracts to Terra Core. This will enable interesting applications such as interchain savings , and several other game changing applications to the Terra ecosystem. Main changes here:
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8/ Now that yield farming is taking a breather, take the time to peel your eyes off the charts and exercise your right to vote.
Can't say our forefathers died for this one, but the relationships of many Terra developers certainly have to make this come around.
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