4/ We had hoped that the onchain bitcoin reserve system would be live by the time the Terra economy would contract, thereby obviating the need for LFG discretionary intervention
Spec here:
Conversation
5/ While this did not happen, allowing BTC to be redeemed against US on an onchain dex, we are just a few weeks away from a testnet launch developed by the team.
Until then, the LFG council decided to err on the side of caution.
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6/ The LFG council currently consists of and myself, and we made this decision via an unanimous vote of the council.
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7/ This will be an important opportunity for the terra and wider crypto community to gather empirical data on how LFG operates & fits into the Terra ecosystem.
Observe over the next few days not on whether LFG chose to deploy reserves, but on how.
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8/ I'll be hanging around this thread to answer any questions people may have.
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Don't you think you're being gamed here - Buying at far higher prices, then being forced to offload at far lower prices?
What makes you think over time these reserves won't dwindle as you continue to benchmark against a spec asset such as BTC?
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Well we minted UST with Luna, where the average price was $100 for the mint
We bought bitcoin with it at average price of ~$41k or so
Think it was not a bad trade?
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Why not just buy tether or a basket of stables to backstop the UST price?
You're backstopping a pegged asset with an unpegged speculative asset, and the point is that these systemic risks often play out at the same time that your speculative asset is at depressed prices
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Because that would not be long term decentralized
Why not just use Tether
Regurgitated fiatcoins are not interesting
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If a lot of the decisions about how the peg is defended in distress are made by a council, do you consider that decentralized? Only a few parties have been actively buying UST over the last few days
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Definitely not desirable! the goal was to have an onchain btc redemption mechanism ready by the next contraction, we just lost the race against time. More here:
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4/ We had hoped that the onchain bitcoin reserve system would be live by the time the Terra economy would contract, thereby obviating the need for LFG discretionary intervention
Spec here: agora.terra.money/t/bitcoin-rese
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Timing was not good last weekend.
If BTC redemption was operating, UST would not depeg at all during the weekend.
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Seems like a higher probability systemic risk event compared to other stables. Betting on USD-stables vs an emerging asset of $1 trillion seems safer, perhaps? Rn you get neither decentralisation nor *relative safety*. Just thinking out loud here.
How can you be sure this will work in a “decentralized” way, when it’s actually more probable that it might still be just the same few parties doing this on-chain?😃
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Economical incentives. Unless you think people will refuse to buy BTC cheaper than it is on market.
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