Blockchain News

Terra Ecosystem Lays Out Redemption Plan

Terra’s co-founder unveils a revival plan that includes abandoning the $UST and forking the chain under a new token.

Starting Afresh

Do Kwon, the co-founder of Terra in a forum post unveils a redemption plan to revive an ailing ecosystem by forking the Terra blockchain. $LUNA the native coin that powers the Terra blockchain fell to almost zero after the $UST de-pegs. 

Do Kwon acknowledges that trust in the $UST was completely shattered after the ‘decentralized money’ collapsed and can no longer serve its purpose. He said

“While a decentralized economy does need decentralized money, UST has lost too much trust with its users to play the role.”
Source: Luna Foundation Guard (LFG) Reserves serve as a second layer of defense to defend the $UST peg but were almost completely drained after the incident 

The Terra ecosystem abandons $UST but plans to reconstitute the chain to preserve the community and the developer ecosystem. In the proposal, validators will reset the network ownership to 1 billion tokens. 

Terra to be Community-Owned

The primary aim of the revival plan is to ensure that the affected parties are fairly compensated. 400 million of the proposed forked tokens will be distributed amongst prior $LUNA holders when the $UST was first de-pegged this month. This distribution will not include Terraform Labs.  

Source: The revival plan is an attempt to strike a delicate balance in the redistribution of value in the ecosystem and to preserve the loyalty of its community

Another 400 million tokens will be shared with the UST holders for holding Terra’s debt. The balance of 200 million tokens will be equally divided among $LUNA’s holders before the chain was halted and to the community pool. 

Decentralized Money 

The value proposition of $LUNA has been built around the vision of providing the crypto ecosystem with ‘decentralized money’. This vision has attracted many supporters as it rings true to the concept of decentralization. 

In his proposal, Do Kwon acknowledges the failure of $UST and left the door open for the community to reiterate this idea at some point in the future. However, the immediate concern is to preserve the layer-1 protocol. 

The fall of $UST, an $18 billion asset by market capitalization has shocked many and it serves as a point of reflection. But, it certainly did not remove the need for a decentralized stablecoin. 

See Chung's interview with our host Tom from May 13 about the Terra fallout plus his overal trading tips and analysis.

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