LUNA Landing Lessons
There are three LUNA Communities out there now (as of May 14, 2020):
the largest one, which is totally horrified by the size and the speed of current events and is now watching this drama as a documentary about zombies invading their home town;
the middle size one, which has lost up to 100% of their portfolio and is trying to deny the reality, staying ‘speechless’;
the smallest one, which is attempting to put a positive spin on this disaster, working on several ‘resurrection strategies’, including, ‘restoring a snapshot prior to attack, removing TFL’, fully collateralizing UST and drafting & deliberating new mechanisms for $LUNA’ (source).
While those groups are going each their own ways, I want to briefly formulate some lessons to learn for all of us — DeFi algorithms developers — from the LUNA catastrophe:
no long-term fixed yields for DeFi platforms, yet;
algos are still too immature for the high-league finance where an average ‘big time’ wall-street shark is still much smarter than protocols devs. Consequently, there must be a ‘circuit breaking mechanisms’ (like, f.e. a 7% drop in prices halt of trading on NYSE) built into protocols as a palliative;
for large-scale DAOs there must be a community ‘crisis management’ plan readily available;
for all stable-coins (collagenized, including) there must be a safety net reserve fund established. If something hits the fan, this fund goes to innocently ignorant fools / addicts, which committed their families savings to our cruel games (each individual case is voted by DAO).