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Luna co-founder proposes ‘new revival plan’ to restore Terra ecosystem

Luna co-founder proposes ‘new revival plan’ to restore Terra ecosystem
Photo Credit: Pixabay
17 May, 2022
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Luna Foundation Guard CEO Do Kwon, whose crypto tokens Terra Luna crashed last week, was under heat from investors who suffered losses of over billions of dollars. The Terra Network co-creator is trying to restore the fallen blockchain after its UST (TerraUSD) stablecoins that is built on the Terra blockchain, de-pegged from the dollar and the LUNA governance token went from nearly $100 to fractions of a penny in just a few days. 

His most recent proposal titled “Terra Ecosystem Revival Plan 2” which he said will “allow blockchain purists to keep the current and collapsed blockchain, which will henceforth be called ‘Terra Classic’. The token will be Luna Classic (LUNC).” 

In Kwon’s first proposal last week, he stressed on “forking” the Terra blockchain, redistributing LUNA tokens and abandoning the UST stablecoin, which was hotly debated and contested by many. This has led to a second proposal also involving forking or splitting the existing blockchain, but with a few differences. 

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Blockchain forks are essentially a split in the blockchain network. Forks work by introducing changes to the software protocol of the blockchain, and are often associated with the creation of new tokens.  

In a Twitter thread, Kwon proposed forking Terra into a new chain sans terraUSD (UST), the algorithmic stablecoin whose de-pegging 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 LUNC token. 

He also suggested that the new chain will airdrop one billion Luna tokens between developers, UST holders, and those who held or staked Luna or its derivative projects before the price of the stablecoin de-pegged.  

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The redistribution will include vesting schedules and token lockups for most of the LUNA, in order to avoid a steep price decline as Terra determines how to move forward without UST at its centre. 

Meanwhile, the unprecedented wipe-out has “destroyed all faith in the project” and left many “experiencing the real pain,” according to various reports. There are many who rubbished Kwon’s suggestions on the concept of forking and believes that Luna does not recover from this.  

Binance Co-Founder and CEO Changpeng Zhao (aka “CZ”), earlier revealed that he does not believe that Kwon’s plan to save LUNA will work. “This won’t work — forking does not give the new fork any value. That’s wishful thinking — one cannot void all transactions after an old snapshot, both on-chain and off-chain (exchanges).” 

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In a series of tweets sent out on May 16, CZ said that he wants to see “much more” transparency from Terraform Labs, “including specific on-chain transactions of all the funds”.  

“It is “extremely important” to have “transparency, speedy communication and owning responsibility to the community,” he said, adding that “regardless of whatever solution is chosen in the end, Binance stands ready to “support the community” in any way it can.  

The sharp crash in Luna has sent shockwaves throughout the cryptocurrency market, with experts linking the crash in the crypto market to be as severe as the big financial crisis of 2008, as per various reports. 

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The near-collapse of these stablecoins — considered to be comparatively safer investment bets within the crypto universe — also prompted regulators and authorities to call for stricter laws governing these financial assets, with many investors taking a “wait and watch” approach.