First and foremost, I would like to share that I initially hesitated to publish this proposal before the proposal 11658 passed, fearing it might unsettle the current signers of the MS wallet. However, circumstances have compelled me to present it now.. Also, I want to debunk any misconception that these funds are not from the community — Is my understanding that they are indeed .
My proposal revolves around the prudent utilization of the 800 million USTC. I suggest burning half of it, which would be 400 million USTC. Another 200 million USTC should be kept in the Community Pool, and the remaining 200 million USTC can be used to establish a new oracle pool for staking USTC on-chain.
The decision to retain 200 million USTC in the Community Pool has a crucial purpose. By doing so, we can effectively take this amount of funds out of circulation, enabling us to allocate it for chain development. To address concerns about the price going down when the Community Pool funds are used, we can implement a solution, I recommend disbursing funds to teams in phases, based on their performance and milestones achieved , this 200 million ustc should be used in no less than 4 years. Additionally, vesting periods can be employed to prevent teams from selling all their funds at once.
Previously, the community pool had over 3 billion dollars, but now it has considerably less, a lot less. By creating a budget for the 200 million USTC that will remain in the Community Pool, we have the opportunity to grow. I propose allocating these funds across various areas such as L1 development (40%), L2 development/infra (15%), Marketing/networking (5%), Repeg efforts (10%), and Utilities (5%), with the rest being allocated as emergency funds , buy back programs or being use in case the “lunc” oracle pool needs a refill .
Now, let’s address the new oracle pool for staking USTC on-chain. To stabilize the price and decrease the circulation supply of the coin, we can encourage users to stake on-chain. I suggest using a portion of the funds to create this new oracle pool ( 200 million USTC), following a mechanism similar to LUNC but without voting power, solely focused on pure staking of USTC. The details of the current oracle pool model exemplified by Ed Kim in this article can be referenced for implementation.
https://medium.com/@edwardkim.ek/no-money-mo-problems-8c11d423fbf5
Based on LUNC’s experience, the staking mechanism could take around 15% of USTC out of circulation in less than a year. Assuming similar results with USTC, this amounts to approximately 1.5 billion USTC will be taken out of circulation, which is more than the 800 million USTC take out of circulation (8%) if we simply just burn it. To counteract the rewards that USTC holders may put back into circulation, we can combine the staking mechanism with burning. For instance, for every 100 USTC a user receives as a reward, the system can burn 200 USTC, thus taking an additional 4% out of circulation and from the total supply. that is why I was suggesting 400 million to be burned, but not all at once.
Burning all the USTC at once might seem tempting, but history has shown that doing so might not yield significant positive impacts. For example, when 438,873,712 million USTC were burned on Jul 4, 2022, it had no substantial effect on USTC or chain development.
https://www.reddit.com/r/terraluna/comments/vs4mrb/lunc_dao_just_had_1_of_its_founders_burn/
In conclusion, I firmly believe that this plan will lead the chain towards success. We will have ample funding for L1, L2/infra, and repeg developments, as well as marketing networking , utilities and more. Moreover, we can effectively take more than 19% of the total USTC out of circulation, which will greatly contribute to a future repeg. I hope the community embraces this vision, and together we can make the chain the biggest Proof-of-Stake project in the cryptocurrency world.
If this proposal passes the community agrees in partial burning and funding the chain with the 800 million USTC .
Best regards, Vegas
