Do Kwon, CEO of Terraform Labs, has just presented a plan to restore the price of the algorithmic stablecoin UST, which has resulted in the price of LUNA surpassing $1.
At the moment, the UST price is hovering around $0.59. Over the past 24 hours, the crypto has seen a 21% rise.
Kwon has said:
"The price stabilization mechanism is absorbing UST supply (over 10% of total supply), but the cost of absorbing so much stablecoins at the same time has stretched out the on-chain swap spread to 40%, and Luna price has diminished dramatically absorbing the arbs."
According to him, a necessary step before taking further action will be to absorb the supply of UST holders who wish to dispose of the asset.
Subscribe to our Telegram channel to stay up to date on the latest crypto and blockchain news.
The objective of the plan is to accelerate the pace of LUNA's launch. Under the mechanism, 1 UST should be available for exchange at any time for $1 in LUNA. According to Kwon, this "will allow the system to absorb the UST more quickly."
He has added:
"Naturally, this is at a high cost to UST and LUNA holders, but we will continue to explore various options to bring in more exogenous capital to the ecosystem & reduce supply overhang on UST."