In the ever-evolving landscape of blockchain ecosystems, maintaining stability and functionality is paramount. Terra Classic faces a pivotal moment in its trajectory, presenting both opportunities and risks in reactivating its market module. Here's a comprehensive proposal to navigate these challenges and pave the way for a revitalized ecosystem.
The core adjustments proposed encompass various facets of the market module, each designed to address specific issues and enhance stability:
1. Spread Fee Adjustment: Setting the spread fee to 98% effectively pegs USTC at 2 cents, with potential incremental adjustments. This mechanism ensures a balanced distribution of fees while reinforcing the stability of USTC.
2. Fee Distribution: Burning 80% of the spread fee, allocating 10% to the Oracle Pool, and designating the remaining 10% to a buyback program pool bolsters the peg and provides avenues for revenue generation.
3. Limits on Liquidity Pools: Enforcing limits on the size of virtual liquidity pools and introducing conditional activation steps mitigate risks associated with excessive liquidity and unwanted coin minting.
4. Hard Caps on Max Supply: Implementing hard caps on the maximum supply of LUNC and USTC adds an additional layer of control and stability to the ecosystem.
5. Introduction of a Kill Switch: Adding a kill switch provides a failsafe mechanism to swiftly address any emergent issues or threats to the system's integrity.
Motivation behind these adjustments lies in the potential rewards and risks associated with reactivating the market module:
Rewards:
- Restoration of USTC stability, revitalizing the chain's utility and bolstering user confidence.
- Revenue generation through spread fees and buyback programs, contributing to ecosystem sustainability.
Risks:
- Potential unwanted coin minting, addressed through multi-conditional liquidity pools and hard caps on coin supply.
Implementation of these proposals entails a series of labor-intensive tasks, including:
- Establishing a testnet to evaluate optimal parameters for liquidity pools and recovery rates.
- Developing mechanisms for fee distribution, burn, and buyback programs.
- Creating a system for multi-conditional virtual pools within the market module.
Additionally, proposing a signaling initiative on Station will gauge community support and ensure transparency in decision-making processes.
Moreover, to further promote USTC pegging, introducing a staking system on the Terra Classic chain is recommended. Utilizing funds from LFG reserves for community-driven initiatives presents an opportunity to bolster the ecosystem's resilience and longevity.
In conclusion, these proposals represent a concerted effort to navigate the complexities of reactivating the market module while prioritizing stability, sustainability, and community engagement. With careful planning, iterative adjustments, and community support, Terra Classic can embark on a path towards renewed glory within the broader blockchain ecosystem.