3 Simple Ways Terra’s Stablecoin UST Could Have Avoided The Death Spiral

Hindsight is a b*tch, but since we have it, we might as well use it.

There were a lot of smug crypto influencers running a victory lap over the carnage that was the $UST meltdown on May 8th.

Statements like the following seemed without question vindicated:

“Decentralized algorithmic stablecoins are an oxymoron and an impossibility.” — swanbitcoin.com

However, not only are decentralized, algorithmic stablecoins a possibility, but I believe that even Terra’s $UST stablecoin could have survived, maybe even thrived, post crisis with a few simple changes:

1. Using Luna Foundation Guard’s Bitcoin reserves as a worst-case $UST backstop

The Luna Foundation Guard (LFG), a not-for-profit organization ostensibly set up to protect $UST from depeg events like May 8, held over 80k Bitcoin pre-crisis.