Do Kwon proposes Terra revival, including token redistribution plan

Terraform Labs co-founder Do Kwon has come up with a proposal to protect the Terra ecosystem following the historic decoupling of its algorithmic stablecoin UST, and the resulting death spiral that led to Terra plummeting (Luna) marks are almost zero.

In a Friday thread on the Terra Research Forum, Kwon said“The Terra community must restructure the chain to protect the community and the developer ecosystem.” His proposal was in response to validator groups discussing the possibility of forking the Terra chain, which involves compensating for the inability or unwillingness to sell its chain during this week’s price crash. UST and LUNA holders of stakes.

Kwon suggested that validators should reset network ownership to 1 billion tokens distributed to LUNA and UST holders and community pools to fund future development.Specifically, 40% of the newly allocated tokens will go to LUNA holders who held assets prior to the decoupling event; 40% will be distributed proportionally to UST holders when the new network is upgraded; 10% will be held in LUNA someone was previously assigned to Chain operation suspended The remaining 10% will go to the development pool.

Regarding the UST once being re-pegged to the U.S. dollar, Kwon said it may not have an impact because Mass Liquidity Events in the Terra Ecosystem this week. In other words, trust in the stablecoin model has been permanently eroded. He explained:

“Even if the peg is finally restored after the last marginal buyers and sellers capitulate, and Luna holders are heavily liquidated and diluted, we will lack an ecosystem to rebuild from the ashes.”

According to CoinMarketCap, LUNA’s market cap topped $41 billion in early April. Terra’s UST value, which is no longer called a stablecoin, peaked at nearly $19 billion. UST fell to a low of around $0.13 on Friday after losing parity with the dollar.

While there is no way to fully restore the blockchain’s value, Kwon said the redistribution plan must compensate the network’s debt holders and “loyal community members and builders.”

From top 10 cryptocurrencies to trading for less than a penny, LUNA’s price chart provides a startling reminder of how fast the cryptocurrency market can change. Source: CoinMarketCap

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Kwon’s proposal was submitted about two days after he published his plan Dollar-pegged savings on UST, which involves increasing the SDR pool and expanding the protocol’s minting capacity. The plan failed to win over the so-called “LUNAtics” community, as the price of LUNA and its sister tokens continued to plummet.