The Terra Classic (LUNC) L1 team plans to create a test environment to verify USTC depeg conditions and simulate potential repeg events.
The L1 Integration Task Force (L1JTF) aims to create a test environment for exploring various ideas aimed at facilitating the re-pegging of the USTC. L1JTF’s project manager, her LuncBurnArmy (LBA), introduced the concept in a recent tweet, sharing a link to the dedicated Agora text.
1. #LUNC community See the following proposal to authorize the L1 Task Force to build the USTC test environment. Note: Currently, we are only focused on parity and will not take long for ongoing efforts.
— 🔥LuncBurnArmy🔥 (@luncburnarmy) May 23, 2023
according to sentence, this proposal uses the existing budget allocated to the L1 team, so no additional community funding is required. L1JTF plans to fund the creation of his USTC test environment with a portion of the computing budget allocated for work in Q2.
The L1 Task Force believes that creating a test environment for the USTC will help explore various ideas and solutions to restore the USTC dollar peg. This remains one of the primary objectives of the Activation Goals, along with a broader supply reduction of LUNC.
Notably, the LUNC community has witnessed numerous proposals aimed at promoting re-pegging.something like that suggestion This included the use of the Divergence Protocol, which penalizes USTC traders who try to sell assets below the peg (i.e., $1). The proposal also aims to use buybacks and swaps to force and maintain re-pegging.
USTC test environment
The L1 team is trying to test how these suggestions work in their environment. The test environment also allows him to simulate different scenarios and gather data on how he performs under different market conditions. Potential uses of the USTC test environment include:
- Reenacting the Depeg affair and testing the potential for capital controls that could have prevented or mitigated the “death spiral” it caused. Examples of such controls include USTC maximum supply limits.
- Simulate a repeg event and find the optimal mechanism and timeframe to achieve it. This includes promoting the previously mentioned divergence fee idea, as well as adopting a volume-based strategy with a deflationary fee.
- Test new strategies to maintain the USTC peg and provide incentives to USTC holders and stakeholders. This includes a review of Oracle module funding and consideration of USTC staking options.
Passing of this proposal means that the community agrees that the L1 team will use the Q1 compute budget for the test environment. Should this come to fruition, the team will be primarily focused on developing his USTC repeg for Q3. However, such focus is dependent on community support and feedback.
LBA emphasized that the team will not continue with the USTC test environment until it implements the Terra Classic upgrade to v2.1.0. parity It uses Luna 2.0 and Cosmos blockchain. L1 team succeeded upgraded After that, the upgrade to v2.1.0 is scheduled for June 14th.
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