LUNA Black Swan: Terra’s Do Kwon Gives AMA on What We’ve Learned & Anchor Action Plan

The Anchor website wasn’t alone. Coinbase, Binance, Kraken, Gemini, and more experienced downtime, as well.

Anchor Liquidation Action Plan

Liquidations are essential for Anchor Protocol to fulfil its core mission: to provide stable, attractive yield on stablecoin deposits.

The team’s action plan for Anchor is to:

  • reduce the bLUNA<>LUNA pool, making it impractical to use the liquidation strategy at such a large scale
  • reduce premiums in general and force liquidators to bid for the premium they want to get the liquidation at
  • work with the community to integrate auto-repaying loans
  • work with infrastructure-focused node operators to add nodes for increased stability on Anchor Protocol
  • add liquidation history/transaction history view to Anchor, displaying cost of liquidation and other stats
  • ensure that the lowest liquidation premium will always win the bid
  • release a mobile webapp deep linked to Terra Station mobile app, scheduled to ship Wednesday, allow Anchor positions to be managed on the go. (In addition, Terra Station app updates coming soon enable Anchor Deposit and introduce mAsset swaps)
  • consider removing the Instant Burn option so that liquidators have to take on beta risk. The largest problem revealed in the liquidation system design was that arbitrators were all bidding 30% for liquidation, so they were incentivized to sell LUNA at a discount. $300 million in LUNA was market sold. Making liquidators bid for collateral will tighten the discount.
  • continue collecting data. The community asked whether the deposit interest rate on Anchor should be decreased, so that the Anchor reserve is larger and/or lasts longer. But, as Do responded, yield is set by governance. Do thinks any proposal should be informed by trend lines based on utilization over time and advises more data collection.
  • add bUSD, USDT, USDC to Anchor Protocol, within a estimated time of a month.
  • add Lido Finance’s stETH and stSOL soon after. Collateral can be added for multiple assets to a single position, meaning a single loan can be taken out against multiple kinds of collateral.

General Terraform Labs response to the Black Swan

UST Re-peg and Proposal 90

It should only take a few days for the peg to be fully restored. It’s already very close to $1, and in any case, Proposal 90 is passing currently and ends in 12 days, increasing stability of the peg.

LUNA Price Action: is there Systemic Risk?

Other Questions

Chai Developments

Governance Timelines

More AMAs

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