In a post on Friday, Terra co-founder Do Kwon walked us through the ashes of the project after the stable coin UST lost its peg to USD and the TERRA blockchain ground to a halt.
Do Kwon shared his view that validators should redistribute LUNA governance tokens and fork the network to move forward. The revival plan aims at preserving the community and developer ecosystem within Terra.
"While a decentralized economy does need decentralized money, UST has lost too much trust with its users to play the role."
After two days of absence from social media, Do Kwon resurfaced on the Terra research forum addressing the present and near future of the project.
Even if the crash of UST and LUNA might have compromised the project credibility, Do Kwon highlights the value of Terra community and "one of the largest and most vibrant developer ecosystems in crypto" and comes up with a token allocation proposal.
The proposal refers to a network fork and redistribution of 1 billion LUNA governance tokens as follows:
- 40% to LUNA holders before the depegging event
- 40% to UST holders at time of upgrade
- 10% to LUNA holders at the final moment of the chain halt
- 10% to the community pool for future development
This allocation is envisioned to reward both the UST holders (since they are the network’s debt holders and need to be compensated) and the most loyal LUNA community members and builders that were supporting the project.
Do Kwon didn't specify where the value would come from, but after Terra lost almost all of its economic value, it will be an uphill battle to maintain community spirit and trust in the Terra brand.
Questions are also being raised about where the remaining amount of Terra’s BTC reserves have been sent to by the Luna Foundation Guard.
The "attack”
The post refers to the depegging event as "the attack" making clear the author's shared suspicion that it has been intentionally caused.
Crypto twitter was abuzz with mostly unfounded accusations about the identity of the attackers, with trading firms Blackrock and Citadel being forced to deny a role in the crash.
The collapse of Terra was initiated by two huge sales of UST on Curve and Binance, which lead to the depegging of the stablecoin and a cascade of liquidations from worried investors that subsequently crashed the price of ecosystems native LUNA token. This in turn lead to a drop in the price of Bitcoin as the Luna Foundation were forced to sell their BTC reserves.
Many critics argue that the Terra stablecoin algorithm structure and UST fast growth without sufficient reserve funds were to blame for the collapse
Terra's motto "decentralized economy needs decentralized money" is still their target and Do Kwon expressed his opinion in the post that this will be reached even if the UST project has failed.
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