In an attempt to support the recovery of Terra the community voted to burn a large amount of UST from its community pool.
Terra founder Do Kwon explained that a potential solution to the Terra disaster is to absorb the stablecoin supply. In response to this, users proposed the burning of 1 billion TerraUSD that was stored in Terra’s community pool and the remaining cross-chain UST that’s deployed on the Ethereum blockchain as incentives.
The burn will help decrease the outstanding bad debt of the Terra economy. Apart from this, it’s also expected to play a significant part in restoring the UST dollar peg by eliminating a big chunk of excess supply.
The proposal was submitted on May 12 and was expected to be finalized after seven days. However, it failed to take effect due to a mismatch in the amount of UST in the community pool and the proposal. This is due to another proposal that was executed, resulting in the removal of some funds from the pool.
Despite this, the community created another proposal on May 20, to proceed with the burn. After seven days, the proposal has finally passed with 153,644,852 voting in favour of burning the UST supply.
