LUNA plummeted to $0.69 as Terra founder Do Kwon outlined plans to rebuild the ecosystem.

Terra founder Do Kwon revealed plans to rebuild the project’s ecosystem after LUNA collapsed 99% from an all-time high to less than $1 and TerraUSD (UST) lost its dollar peg.

In a Twitter thread, Kwon told his 532,000 followers that he would be working with the Terra community to “get over the crisis” and return to its original form.

LUNA plunged more than 99% to $0.69 from an all-time high of $119 after Terra’s UST stablecoin lost its peg to the dollar. USTs are designed to be pegged to US dollars and allow holders to exchange 1 UST for 1 dollar worth of LUNA. When UST fell below the dollar, massive selling pressure pushed LUNA’s price down as aggressive arbitrage took place.

say volume,

“The price stabilization mechanism absorbs the UST supply (more than 10% of the total supply) but at the same time the cost of absorbing too many stablecoins increases the on-chain swap spread to 40% and the Luna price absorbs arbs.

Among other things, the only way forward is for $UST to absorb the stablecoin supply it wants to shut down before it starts the repeg. There is no way around it.”

Kwon also said the team has approved a community proposal to increase the casting capacity of UST from $293 million to $1.2 billion so that the system can absorb UST faster.

at proposal Community members say this move could put more pressure on LUNA in the near future, but it will eventually strengthen the overall system in the long run, as Kwon noted.

“Allowing more efficient UST incineration and LUNA minting will put pressure on LUNA prices in the short term, but will be an effective way to get UST back to peg and ultimately stabilize LUNA prices.

Yes, billions of USTs are burned and LUNA is heavily diluted. Nevertheless, there is no limit to LUNA supply and this market mechanism will actually work to provide stable USTs and stable LUNA prices (possibly lower price points for LUNA).”

At the time of writing, LUNA is trading at $2.28.

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