Kwon Proposes Forking Terra, Nixing UST Stablecoin in ‘Revival Plan 2’
“$UST peg failure is Terra’s DAO hack moment,” the Terraform Labs CEO wrote, “a chance to rise up anew from the ashes.”
Terraform Labs CEO Do Kwon is out with a new “Revival Plan” to save the Terra ecosystem in the wake of last week’s stablecoin meltdown. His new slogan: “Terra is more than UST.”
Calling the $40 billion implosion “a chance to rise up anew from the ashes,” Kwon said that “the ecosystem and its community are worth preserving” as he pitched the second take revival plan as a “living document.”
In Monday’s post and an accompanying Twitter thread, Kwon proposed forking Terra into a new chain sans terraUSD (UST), the algorithmic stablecoin whose depegging crushed the entire ecosystem, the LUNA token included. Holders of LUNA on the “Classic” chain (the existing chain) would receive an airdrop of the new chain’s token under the plan. The old chain will continue to operate using the newly renamed luna classic (LUNC) token.
Kwon said the new chain will be “fully community owned,” and Terraform Labs – Kwon’s company and the creators of Terra – will not be eligible to receive funds in the initial token disbursement.
The plan will go into effect if it’s voted through by token holders. Kwon promised voting would begin on May 18. According to his proposed timeline, the new network launch could come as soon as May 27.
In what may have marked the largest token collapse in crypto history, Terra’s $40 billion stablecoin juggernaut crashed last week. Terra’s UST stablecoin, which is supposed to stay “pegged” to the price of the dollar, plummeted below 10 cents. LUNA, which UST’s “algorithm” uses to help prop up the stablecoin’s dollar peg, dropped from $80 to below 1 cent amid the turmoil.
In a tweet Monday, the Luna Foundation Guard, stewards of Terra’s vast bitcoin (BTC) reserves, explained that it sold off virtually all of its over-2 billion dollars worth of bitcoin in an ultimately failed attempt to defend UST’s peg. The announcement dashed any hope that Terra might be able to use the reserves to substantially compensate investors.
Monday’s announcement from Kwon followed an original “Revival Plan” he proposed last week. The earlier plan, while light on specifics, also proposed handing ownership of Terra over to its community.
Compared to the earlier plan, the newer one places a larger percentage of the forked chain’s initial token distribution (25% versus 10%) into a “Community Pool” responsible for funding future development. The new plan also gives 5% of the tokens to “essential developers” – a group not mentioned in the original proposal.
The vast majority of new LUNA tokens would go to those who lost billions of dollars from last week’s collapse. Following a vesting schedule, smaller holders would get their full allocations faster than whales, or large holders, who might have to wait up to five years. Terraform Labs would get nothing under the deal.
UPDATE (May 16, 18:25 UTC): Adds details throughout.
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