In the midst of Terra’s mounting problems, platforms hosting Terra USD (UST) liquidity flows are reconsidering their support for the crashed Stablecoin.
The Curve community has raised the most recent UST issue. The curve is a Swiss-based platform that enables on-chain Stablecoin liquidity. One of the coins supported by the platform is UST.
A Curve community member has strongly proposed to prevent UST pools from being incentivized on the platform. The proposal contends that UST is no longer living up to its reputation as a dependable stablecoin. As a stablecoin, UST has lost 90% of its value.
Pools Could Be jeopardized
According to the member who proposed the proposal, it is still unclear how the Terra Luna and UST chains were exploited and ruined, which means that bad actors could still exploit the Curve DAO’s incentivization of UST.
In an ideal world, bad actors would increase their activity on Curve and bribe the pools into granting them access to empty pools. These occupied Liquidity Pools would farm CRV but provide no liquidity value to the Curve DAO.
This is due to the current value of UST being significantly lower than the original Stablecoin rate, which was previously pegged to the US Dollar. This could be a way for malicious entities to occupy large LPs and keep others out, resulting in a negative loop and loss of liquidity for CRV and the Curve ecosystem.
Status of Proposal
Curve Finance appears to support the proposal to remove UST from the platform. In a recent tweet, it appeared to indicate as much.
Terraform Labs is dealing with serious issues. Do Kwon is rigging the Terra community’s voting exercise to rebirth LUNA Network. In South Korea, the company and Do Kwon are also facing stringent legal issues.