Terra CEO Do Kwon announced on Twitter the recovery plan prepared for the stable cryptocurrency TerraUSD (UST) to reach $1 stability again.

Kwon said that the Terra community has been having a hard time this week, while conceding that mass exits from UST have resulted in sales of the LUNA token as well due to the functioning of the stablecoin. In the last case, LUNA suffered a massive drop. As of now (17:04), it is changing hands at $3.02, according to CoinMarketCap data.

Do Kwon said that the first action to be taken is to reduce the supply of stablecoins before UST exits that threaten the Terra ecosystem accelerate again. Accordingly, it is planned to quadruple the amount of daily issued LUNA and ease the withdrawal process for more UST holders. Acknowledging that this will come at a high cost for UST and LUNA owners, Kwon said that in the meantime, they will continue to evaluate options to bring outside capital to the ecosystem and reduce the supply pressure on UST. In the coming periods, it was emphasized that the reserve structure of stable crypto money will be redesigned.

TerraUSD Ust

Voting on the proposal to increase the LUNA supply is currently underway. The majority votes to increase the LUNA supply. If accepted, UST sales for LUNA will occur more quickly. According to this theory, increasing the amount of LUNA in the short term will help to reduce the supply in the long term and help the UST to return to the 1 dollar constant.

Do Kwon believes that with this offer, they will realize more efficient UST burning. However, increasing the LUNA supply will also put pressure on the altcoin price. But Terra's CEO sees this as an effective way for UST to return to its fixed price. In the end, he thinks, there will be an equilibrium in the price of LUNA.

As a result, the UST recovery plan is coming with a more negative impact on the LUNA price. The LUNA price has dropped from $4 to $2 since the recovery plan was announced. The UST is currently down to $0.45.