I have suggestion about Premium problem.
The real problem is no real chance for arbitrage when the Terra price is too premium. Example the arbitrager will sell at Terra price and buy at real world so they hope that the Terra price will come down after that they will buy in Terra and sell in real world. These will finish the strategy.
In fact that, It’s not gonna happen in Terra world because the valuation of stocks in terra are more higher than the real world. Ex. BABA in real world have a little dividend, it makes valuation BABA in long term about 240-260$ depend on opinions but BABA in Terra have a lot dividend from staking so the valuation is about like 1000$ maybe more. So the terra price is undervalue like now so no chance for arbitrager.
We need to give benefit in reasonable. We need to add staking reward for minter side 1.5 time of buyer side. Example we buy BABA in terra price for staking assume at that time APR is 100%, as the same time if we mint BABA for staking, the APR for minter should be 150%. If we can do this fundamental staking reward for minter side and buyer side, the arbitrager could take benefit when the price is premium.
Why should APR staking of minter side be 1.5 time of buyer side?
Example we buy BABA value 100$ and pool with UST value 100$ for staking APR 100%. It’s mean we invest in BABA-UST(LP) 200$ for reward 200$ per year.
In the same benefit for minter side, we mint BABA value 100$ so give collateral 200$ (assume collateral ratio 200%) after that we give BABA value 100$ to stake. Totally we invest 300$ for staking BABA-UST(LP) value 200$ so The APR of minter for staking should be 150% what it’s mean we will get reward 300$ per year for total invest 300$. These make fare for minter side and buyer side.
If we do like this, the terra price will diff from Oracle price around 1.5% in long run. Because if it premium, nobody wants to buy, they will come to mint for staking. That mean more supply and no demand so Terra price will come down in long run economic. So the arbitrager can happen because they can sure that the terra price will come to no premium in nature of these fundamental.
These just my opinion. It’s a concept. I hope it can help team. If it happens, many people will come to arbitrage a lot. But if it’s not change, A lot of people will come to buy a lot whatever premium +30% or 50%.