3. Any contingency plans if UST depegs ? In extreme stress or/and regulatory challenge.
Any stablecoin can have depeg issue, even USDC and USDT. Terra itself has a plan to reduce the risk of depeg by introducing BTC reserve. They have already bought over $1.4B worth of BTC (https://bitaps.com/bc1q9d4ywgfnd8h43da5tpcxcn6ajv590cg6d3tg6axemvljvt2k76zs50tv4q) , and the current plan is to purchase $10B worth of BTC, with implementation proposal at: https://agora.terra.money/t/bitcoin-reserve-pool/5259
Protocol wise, our V2 plans to allow more types of decentralized coins as collateral (e.g. FRAX, BTC, ETH). It should greatly reduce the systematic risk caused by the depeg of a single coin.
Also, this problem can be mitigated by using TWAP of aUST price at a given interval (e.g. an hour). Depeg most likely will recover say within reasonable interval. We will explore what will be the best interval.
To put it in short, we believe UST will have lower and lower depeg risk as their system matures and more money is in UST. And we also have plan to mitigate that risk at the protocol level. But there is always risk (even for USDC/USDT). We think over time, the risk of holding UST will actually be smaller than USDC/USDT. UST have much less counterparty risk and is censorship resistant. Could take a while to get it there though, but that’s what we are here for.