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Incentivising UST and Luna on Osmosis exposes the ecosystem and stakeholders to significant regulatory and stability risk.

In many ways UST is similar to Stripper Dollars:

1. UST adoption has to a large extent been driven by shady activities and circumvention of regulation. This includes enticing the wider public to trade regulated products without any consumer protection (Mirror Protocol) and luring savers with high returns without explaining the risk of losing the principal (Anchor Protocol) when/if UST collapses.
2. Like Stripper Dollars, UST provides no clear benefits compared to "the real deal", i.e. a USD backed stablecoin. Only Luna holders benefit from the minting of UST.
3. Stripper Dollars have a tendency to become worthless overnight. Algorithmic stablecoins have a similar track record.

Is UST really the best USD stablecoin for Osmosis? It seems like we could easily do better by adopting an existing USD backed stablecoin such as USDC.

When evaluating the commentary and voting on this proposal, keep in mind that key figures from in the Cosmos ecosystem are heavily invested in Luna and thus have strong economic incentive to see UST and Luna integrated in Osmosis, regardless of risk and long term consequences to the ecosystem.

Voting YES on this proposal signal that we, as the broader community,

1. Desire a more robust, better regulated and more transparent USD stablecoin for Osmosis, that is future proof. This could be USDC bridged from Ethereum or a similar mechanism.
2. Reject offering OSMO incentives for Luna and UST pools as it exposes the Osmosis community to regulatory risk from (at least) the SEC. If this proposal passes, it minimises the gauge settings from proposal #52 "Add Incentives to Osmo/Ust and Osmo/Luna".

Background:

Regulatory Risk: Mr. Do Kwon is currently engaging in fisticuffs with SEC lawyers regarding the specifics of how (and if) he was served during Mainnet 2021. This seems like a feeble attempt to distract from what is really the larger play regarding UST and Luna. [Hidden link]

Even if the SEC is unsuccessful in shutting down Terraform Labs and it's services in South Korea, they can certainly persue U.S. entities offering trading and staking services around UST and Luna.

Offering incentives in the form of OSMO incentives for Luna and UST on Osmosis exposes the wider community (including validators) to this same level of scrutiny. If this is a concern for you, vote YES on this proposal.

Stability Risk: Algorithmic stablecoins have historically imploded spectacularly once their supply decreases and they enter a death spiral.

This is also a likely outcome for Terra stablecoins and it might be an understatement to claim Terraform Labs are scrambling to sustain growth: An additional 3-4 billion UST is about to be minted. [Hidden link]