Summary:
The Curve Finance DAO has initiated a proposal to remove all UST pool gauges. The proposal argues that Curve (CRV) should no longer incentivize UST pools as it will result in a negative feedback loop for the token. The team at Curve Finance
announced the proposal earlier today using the following Tweet.The proposal further explains that UST’s value has dropped by 90%, and the Terra ecosystem has roughly $9 billion worth of bad debts. Additionally, it is clear that there is no ‘prospect of sustainable recovery of the peg.’
Furthermore, the proposal states that it is not yet clear ‘how exactly weaknesses were exploited and if these vulnerability vectors will persist even in the case of a successful bailout.’
The current situation also creates two problems for Curve Finance.
At the time of writing, 100% of the votes cast by the Curve Finance community are for the proposal. Voting is also open for the next six days.
TerraUSD (UST) is trading at $0.088, signifying a 91.2% depegging from the $1 mark at the time of writing. Earlier today, the UST stablecoin hit a new low of $0.0778.
The chart below, courtesy of Coinmarketcap.com, further provides a visual cue of the severe situation surrounding the depegging of UST since the beginning of this month.