The Anchor Protocol community suggested ways to stabilize Luna, the founder of Terra got in touch and supported the community.
For the third day running, the value of Luna Terra was plummeting. By May 11, it had fallen in price by 73%, equalling in price as of August last year. Over the past two days, the total blocked value (TVL) of Anchor, a decentralized financial platform (DeFi), has fallen by $11 billion. The drop occurred despite the fact that TVL peaked at $17 billion just a week ago!
In this regard, Anchor Protocol has proposed its own ways to stabilize Luna, namely:
- Reduction of minimum interest rates to 3.5% and maximum deposit rates to 5.5%
- Increase the virtual liquidity of Terra swaps on Luna by 1000 times to prevent a prolonged decline in the UST exchange rate.
- It is also proposed to reduce the current yield, which is 18%.
The founder of Terra got in touch and expressed his concerns about the situation, but also expressed hope that it is possible to overcome this crisis through joint efforts.
Do Kwon described how he sees the most effective way to solve the problem. On Twitter, he wrote: “The only way forward will be to absorb the supply of stable coins, which wants to exit before UST starts to grow. There is no way around it.”
In addition, the founder of Terra drew attention to the community’s proposals. Do Kwon stated that Terra supports the “1164” community proposals aimed at bringing UST back to the proposed $1 peg. Among the options offered by the community, he singled out a proposal to increase the capacity for minting LUNA Terra from $293 million to more than $ 1.2 billion.
Do Kwon also believes that there is a way out of the crisis through joint efforts.
Despite the fact that the community and the founders are working together to solve the problem, we can safely assume that the way out of the crisis will not happen instantly, but will take some time.