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Biggest DeFi Stablecoin Protocol Wants Terra’s USD (UST) Booted Out Of The Platform

thecryptobasic.com 19 May 2022 11:42, UTC
Reading time: ~2 m

The Curve Community Wants Terra’s UST Booted Out Of The Platform.

Amid the mounting issues beleaguering Terra, platforms hosting Terra USD (UST) liquidity flows are now rethinking their support for the crashed Stablecoin.

The latest issue about UST comes from the Curve community. The curve is a Swiss-based platform that facilitates Stablecoin on-chain liquidity. UST is one of the coins supported on the platform.

However, a member of the Curve community has forwarded a strong proposal to stop UST pools from being incentivized on the platform. The proposal argues that continuing to incentivize UST pools would be bad for Curve because, for starters, UST is no longer living up to its status as a reliable stablecoin. UST has lost 90% of its value as stablecoin. It has also been de-pegged from the USD.

Pools Could Be Compromised

According to the member forwarding the proposal, it’s still not yet clear how Terra Luna and UST chains were exploited and ruined, which means that the incentivization of UST on the Curve DAO could still be exploited by bad actors.

Ideally, bad actors could mount increased activity on Curve and bribe the pools into allowing them access to empty pools. These occupied Liquidity Pools would farm CRV without facilitating any liquidity value to the Curve DAO.

This is because the current value of UST is way below the original Stablecoin rate that was previously pegged to the US Dollar. This could be a loophole for malicious entities to occupy huge LPs and prevent others from entering resulting in a negative loop and loss of liquidity for CRV and the Curve ecosystem.

Proposal Accepted?

Curve Finance seems to be backing the proposal to boot out UST on the platform. It seemed to indicate as much in a recent tweet.

A proposal to stop all emissions to UST-related gauges (regardless on whether one weight-votes or not).

Good bye UST – it was a good experiment, but it didn't work out: UST supply grew much larger than Luna liquidity which can absorb redemptions.https://t.co/eSQPnf4rTh

— Curve Finance (@CurveFinance) May 19, 2022

Wu Blockchain reported this as well. On its part, Terraform Labs is dealing with even bigger problems at the moment. The Terra community Alleged Ongoing Voting Exercise to Rebirth LUNA Network Is Being Rigged By Do Kwon. The company, along with Do Kwon, is also facing stringent legal issues in South Korea.

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