Conversation

Erica Wall X 🏴
@ercwl
@LFG_org
reserve was funded with 50m LUNA that came from the initial ICO. That’s 5% of the entire LUNA supply. Imo it sets a bad precedent when an algostable chooses to leverage non-renewable liquidity sources to maintain a peg (except for in very early stage bootstrapping).
8
80
Erica Wall X 🏴
@ercwl
And when you take BTC and put it into a multisig wallet and make your protocol depend on it, decentralization goes out the window. You can’t fork LUNA because Terraform Labs and
@LFG_org
get to choose the winner since they control the BTC multisig in control of the reserve.
5
110
Erica Wall X 🏴
@ercwl
The reason for establishing this reserve could be thought of as a good idea because stability is often psychological and self-reinforcing. If people are worried about the UST peg, it is harder to maintain it because in turbulent times people will try to ”escape to safety”.
2
55
Erica Wall X 🏴
@ercwl
Things that are perceived as having the strongest peg also see much less stress testing of their peg. That’s why a 3B safety net can yield much more than 3B in cost savings, because of the psychological impact that leads to way less stress tests in perpetuity.
1
56
Erica Wall X 🏴
@ercwl
But, using these kind of one-off solutions to build a reserve is a huge miss because it still undermines the belief in the system’s sustainability if you leverage ICO funds to build it. It inspires much greater confidence if you sustainably built a reserve from protocol fees.
3
63
Erica Wall X 🏴
@ercwl
TL;DR
@LFG_org
is centralized and funded by ICO money which is inherently unsustainable, violating the two most important tenets of a decentralized algostable.
7
109
Erica Wall X 🏴
@ercwl
I didn’t see
@stablekwon
clarifying anywhere that the reserve was built using ICO money, and he gets super defensive if you want to write a thread about where the money came from that’s longer than a tweet.
Quote Tweet
Do Kwon 🌕
@stablekwon
·
Replying to @ercwl and @adam3us
Did you replace my explanation with a literal stream of consciousness and call it better? Useless iwo
13
110
Do Kwon 🌕
@stablekwon
Hey Eric, couple of clarifications: First, the reserve is not funded through an initial coin offering, unless you mean the luna we are holding is an “ICO” Terra only raised 32M or so from funds before network launch, and don’t think this money made a meaningful contribution
3
232
Do Kwon 🌕
@stablekwon
Replying to
@stablekwon
and
@ercwl
In terms of UST seigniorage being used in the future to buy btc, just as usdt seigniorage used to increase bank reserves, was discussed in my spaces with udi, and my recent podcast sprint across unchained, etc - i think i explained how things work pretty well
5
237
Erica Wall X 🏴
@ercwl
Thanks, this is much better than our previous altercation. I will check out all of this. In the meantime: > the reserve is not funded through an initial coin offering, unless you mean the luna we are holding is an “ICO” All of
@LFG_org
’s wealth came from TFL’s ICO allocation…
5
39
Show replies